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[Bloomberg Markets]( [Forward Guidance]( [FOLLOW US [Facebook Share]]([Twitter Share]( [SEND TO A FRIEND [Share with a friend]]( French bonds sell off as the left and far-left discuss an electoral alliance. Mike Pence heads to Europe for security meetings and it's Pimco versus the market on inflation. French bonds hit A new twist in the French election is hitting the country's sovereign debt market. Socialist Party presidential candidate Benoit Hamon said he's in talks with far-left candidate Jean-Luc Melenchon about the prospect of uniting the left by establishing a [single candidac](y for the election. Polls suggest that such a move could leave the run-off vote potentially between far-right Marine Le Pen and a strongly leftist candidate, neither of which would be viewed as a good [outcome for markets](. Pence in Europe Vice President Mike Pence will be [meeting leaders in Munich and Brussels]( this weekend, where he is expected to provide reassurance of the U.S. commitment to NATO, while repeating demands that European allies contribute more to the alliance. New Treasury Secretary, Steven Mnuchin, will be heading to Europe next month for a [G-20 meeting](, where he will also have to inspire confidence in the U.S. administration amid President Trump's fiery rhetoric on foreign-exchange levels and regulation. U.K. retail sales unexpectedly decline Retail sales dropped for the third month in a row in January, [declining 0.3 percent](, well below market expectations for a 1 percent advance. The pound dropped [as low as $1.2388]( after the data were released, falling by the most in more than two weeks. Also in the U.K. today, former prime minister Tony Blair urged Brexit opponents [to fight to keep Britain in the European Union](. Markets drop Overnight, the MSCI Asia Pacific Index [lost 0.3 percent]( while Japan's Topix index fell 0.4 percent as the yen strengthened. In Europe, the Stoxx 600 Index was [0.5 percent lower]( by 5:40 a.m ET as miners and energy producers lost ground. U.S. index futures [also slid](. Inflation With consumer price inflation in the U.S. reaching the highest level since 2012, it seems that Pimco's [warnings on inflation]( may be coming true. But one place such concern is not showing up is in the bond market, a sign investors expect core price pressures to be [held in check](. Allianz SE reported a 23 percent increase in fourth-quarter net income, saying that the Pimco [turnaround]( is on track. Here's what you should read today Economists are fueling the [global debate]( over refugees. Only Germans [love the euro]( these days. China futures volume surges after [regulators loosen curbs](. Why Le Pen could be [bad news]( for Putin. Trump holds [wild, unscripted]( 77-minute press conference. Searching for melted nuclear fuel, [one dead robot]( at a time. Tantrums, massacres and [bond market reversals](. And finally, here’s what Joe’s interested in this morning French bonds are weakening today on the news that two left-wing candidates (Benoit Hamon and Jean-Luc Melenchon) are holding talks to unify their campaigns, potentially setting up a final-round showdown between Le Pen and a leftist. Markets perceive this to be good news for the anti-euro candidate, and her odds of winning in the betting markets have hit a new high of about 35 percent. While market participants are following the electoral horse race, there's less attention being paid to France's deepening ideological rifts. There's a [great piece in The Nation]( from earlier this month by Harrison Stetler on the three distinct movements that are shaping the race. One such force, of course, is Le Pen's National Front itself: Populist, nationalist, statist. It draws from a surprisingly diverse group, including former leftists who have experienced, what Stetler dubs, a "radicalization by disillusionment." Then there's Macron's tech-inspired, Obama-esque liberalism. It's an optimistic ideology but reflects the status quo. And then there's the mainstream leftist movement. Their policies and resolve have been hardened by the failures of their counterparts in other industrialized economies over the past year. In sum, it's an excellent read to understand the debates shaping the race -- and the forces propelling politics all over Western markets. You received this message because you are subscribed to the Bloomberg Markets newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022