It remains to be seen whether all the hype is justified, but for whatever reason, markets are transfixed by this weekend's French election.  Several recent polls indicate that Marine Le Pen has no chance while several other polls suggest it's too close to call.  If Brexit and the US election are any clue, it's probably best not to get too wrapped up in what the polls say.  All we know is that it's a close race and that markets are seemingly ready to react.

If Le Pen wins, the ostensible reaction will be good for bonds and bad for stocks because she's seen as a potential risk to the long-term stability of the European Union.  It's not her political agenda, but simply the fact that she'd be another success story for global populist sentiment--not exactly what the EU needs if it's going to enjoy years of unfettered bureaucracy.  

Whether or not the actual market reaction lives up to the hype, bonds have clearly been consolidating in anticipation of the event.  For Treasuries, this has taken the form of a correction to the recent rally.  Although it's never "fun" to see red on the screen, the past few days of weakness haven't remotely threatened the short-term trend toward lower rates.  To be clear, that doesn't mean the trend won't necessarily come under threat in the near future--simply that it hasn't officially been challenged.  Here's what that looks like in chart format.

The only significant scheduled economic data on tap is the 10am release of Existing Home Sales, expected to come in at 5.60 vs 5.48 mln previously.  Even if it falls far from forecast, this report isn't typically a big market mover.  Look for volatility surrounding the various European "closes" around the 11:30 (stocks) and 12noon (bonds) hours.  Finally, the 3pm (bonds) and 4pm (stocks) domestic closes could see a rush of "position-squaring" ahead of the potentially volatile weekend.