France’s 10-Year OAT Yield Hits Four-Month Low

France’s 10-year OAT yield fell toward 3.3%, its lowest level since October 16, as investors moved into safer assets amid growing risk sentiment. Softer-than-expected US inflation data added support to European bonds, reinforcing expectations that the Federal Reserve may have room to resume interest rate cuts. In the euro area, market participants noted signals that the European Central Bank remains largely comfortable with the euro’s recent strength. Attention also turned to reports that Bank of France Governor François Villeroy de Galhau, regarded as a dovish ECB voice, could step down earlier than expected. ECB President Christine Lagarde reiterated last week that the inflation outlook is in a “good place,” while minimizing concerns over the single currency’s strength. Money markets currently assign just a 30% probability to an ECB rate cut by December.

France’s 10-year OAT yield dropped to 3.35%, reaching its lowest point since October 22, as investors awaited the release of US consumer price data later in the day for clearer signals on the Federal Reserve’s policy direction. The pullback comes after stronger-than-expected US labor market data published on Wednesday dampened expectations of a near-term Fed rate cut. Across Europe, investors evaluated signs that the European Central Bank remains largely at ease with the euro’s recent strength. Markets also reacted to reports that Bank of France Governor François Villeroy de Galhau, considered a dovish policymaker, may step down earlier than previously planned. ECB President Christine Lagarde stated last week that the inflation outlook remains in a “good place,” while minimizing concerns about the euro’s appreciation. Money markets are currently assigning only a 30% likelihood to an ECB rate cut by December.

France’s 10-year OAT yield stabilized just below the 3.4% mark, remaining at its lowest level since late November, as investors pared back expectations for Federal Reserve rate cuts in response to upbeat US labor data. Nonfarm payrolls increased by 130,000 in January, the strongest rise in more than a year, while the unemployment rate unexpectedly declined to 4.3%, underscoring ongoing labor market stability at the start of 2026. Traders now see a Fed rate cut fully priced in for July rather than June, with odds of a March move below 5%. Meanwhile, in the euro area, markets weighed signs that the European Central Bank is largely untroubled by the euro’s recent strength, along with reports that Bank of France Governor François Villeroy de Galhau, regarded as dovish, will step down ahead of schedule. ECB President Christine Lagarde recently described the inflation outlook as being in a “good place,” while minimizing concerns about the currency’s appreciation.