– This is the script of CNBC's news report for China's CCTV on February 21, Tuesday.
Welcome to CNBC Business Daily, I'm Qian Chen.
Political uncertainty made a comeback in the European bond markets during the trading session on Monday, with the latest poll showed the far-right candidate Marine Le Pen narrowing the gap with opponents in the race for the French presidency.
the poll on Monday showed that Le Pen enjoys a 27% supporting rate for the first round, and is now 16 points behind centrist Emmanuel Macron, down from 20 points previously for a potential second-round run off scheduled for May. Le Pen is 12 points behind conservative candidate Francois Fillon, from 14 points previously.
This shows that the public expects Le Pen to win in the first round, in April, but to be defeated in the second-round.
However, after Brexit and Trump's victory, considered two biggest black swan events last year, investors are now concerned about Le Pen's winning chance and her anti-euro stance.
[CHARLES (t) DALLARA, Partners Group Vice Chairman] "Eurozone without France could not survive. We have to look at the polls, and realize she is, for better or worse, a strong candidate right now. I do think as the election approaches however, that alternative canditates especially Mr. Macron and and who knows, perhaps Mr. Fillon will regain some momentum but right now, they are obviously struggling a bit."
And the bond market have started to price in the increasing possibility of Le Pen winning and France, as well as an anti-Euro candidate winning in Italy.
Overnight in Europle, French government's 10-yr bond jumped as much as 10 basis points in the intraday, and 5-year jumped 8 bps.
Meanwhile, German 2-yr yields dropped to a record low of -0.85%.
The move also resulted the French-German 10-yr government bond yield spread blows out to 85 bps, the widest level since July 2012.
Meanwhile, Italy remains to be a risk factor as well.
According to a report released by Deutsche Bank, Italy poses the greatest threat to stability of the euro area in spite of the impending presidential elections in France.
The increased likelihood of a PD party split, which has now become Deutsche Bank's base case scenario, has resulted in the yield spread between Italy and Germany's 10-year bonds widening by the most since February 2014.
Analysts at Deutsche Bank projected that September would now be the most likely time for elections to be held in Italy.
CNBC's Qian Chen, reporting from Singapore.