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Analysts at Danske Bank point out that yesterday marked the end of an era, as Angela Merkel announced she will step down as head of her political party, the CDU.

Key Quotes

“The dismal election results in the state of Hesse were the last straw for the G7’s longest serving head of state. Although Merkel will not seek re-election as the head of her party CDU in December, she will remain Chancellor until the end of her term in 2021.”

“Mirroring pan-European political developments, large German mainstream political parties have witnessed eroding popular support. On the right, the CDU and CSU have been under pressure from the right-wing populist party AfD.”

“At the other end of the political spectrum, SPD has been hurt by the rise in popularity of the Green party. German government bonds underperformed on worries concerning the sustainability of Germany’s government. We do not think Merkel’s decision will undo Germany’s solid fiscal stance.”