Bond Market Dynamics and Political Influence

This chapter explores the intricate relationship between fiscal dominance and the bond market, particularly highlighting inflation swaps as a tool for understanding central bank decision-making. It examines how political factors impact market behavior, including the unusual movement of inflation expectations and nominal yields, while analyzing historical monetary policy effects. Additionally, the chapter discusses the political landscape in France, its influence on financial markets, and the potential repercussions of upcoming elections on economic conditions.