In recent days, French President Emmanuel Macron's decision to call a snap election has caused some turbulence in the European bond market. However, experts and major investment firms remain optimistic, viewing this chaos as a buying opportunity rather than a contagion risk.

Sovereign bonds in the traditionally considered high-risk southern countries of Europe quickly rebounded despite the initial spike in yields. Vanguard Group Inc. and Jefferies International believe that any potential contagion effect on periphery bonds presents an opportunity for investors. Similarly, BlackRock Inc. and Pacific Investment Management Co. founder, Bill Gross, are maintaining their wagers on European debt outperforming that of the United States.

The attractiveness of Europe's sovereign bond markets to international investors has been growing, as expectations for the European Central Bank's monetary policy diverge from the Federal Reserve's stance on interest rate cuts. In April, the premium paid by US Treasuries over equivalent German bonds reached its highest level in five years.

Ales Koutny, head of international rates at Vanguard, stated that the widening spreads in French bonds provide an opportunity to invest in other European countries. The spread between Italian and German 10-year bond yields saw a significant increase following Macron's announcement. However, before the recent selloff, optimism surrounding Italian Prime Minister Giorgia Meloni's willingness to cooperate with Brussels had helped narrow the gap to a two-year low.

Spain has also made positive strides, narrowing its yield gap over France. Currently, there is less than a 20 basis points difference between them at the 10-year mark, the smallest gap seen since the global financial crisis. Spain's economic rebound and efforts to reduce public debt have made it a market favorite this year. Additionally, Greece's Prime Minister Kyriakos Mitsotakis announced plans to repay bailout loans ahead of schedule, further contributing to the positive sentiment surrounding European bonds.

Despite the initial impact of Macron's snap election, experts believe that the risk remains specific to France and not the entire eurozone. Alexandre Caminade, CIO for core fixed income at Ostrum Asset Management, suggested that the chaos could shed light on France's poor fiscal situation, boosting investor confidence in countries with more favorable outlooks.

France's sovereign credit score was recently downgraded by S&P Global Ratings due to the ballooning budget deficit. Macron's decision came as his centrist party faced a defeat by Marine Le Pen's right-wing National Rally in the European Parliament elections. Le Pen's economic policies, advocating for actions that could increase state liabilities, have caused concerns among investors.

Some asset managers, however, remain cautious. David Roberts, head of fixed income at Nedgroup Investments, highlights the lack of value in European government bonds to compensate for the risk and volatility, particularly due to the early stage of the election campaign.

It is worth noting that unlike previous French elections, where fears of France exiting the European Union triggered a selloff in peripheral debt, the chaos of Brexit has diminished the potential for such rhetoric. This makes the current situation more of a French-focused story rather than a eurozone-wide concern.

Mohit Kumar, chief strategist and economist for Europe at Jefferies, emphasizes that the focus should be on French debt, while suggesting buying Italian bonds to take advantage of the wider selloff.

Overall, despite the political turmoil in France, experts and investors seem confident that Europe's bond rally will remain intact, with the crisis serving as an opportunity rather than a threat to the market's performance.