France’s OAT Yield Hits February High Amid Inflation Risks

France’s 10-year OAT yield climbed above 3.4%, its highest since February 9, as investors responded to stronger-than-expected Eurozone inflation data and escalating Middle East tensions. February figures showed annual Eurozone inflation at 1.9% and core inflation at 2.4%, both exceeding forecasts. Market pressures were compounded by surging energy costs, with natural gas and crude oil prices spiking after the formal closure of the Strait of Hormuz and the ongoing suspension of Qatari LNG exports. Higher energy prices are expected to prolong inflationary pressures across Europe, potentially prompting the European Central Bank to maintain a hawkish stance. Meanwhile, US President Donald Trump indicated that the military campaign against Iran could last four to five weeks but emphasized that US forces are ready to extend operations if needed.

France’s 10-year OAT yield climbed toward 3.4%, marking its highest level since February 11, as escalating Middle East tensions rattled global markets and led investors to reassess the likelihood of near-term interest rate cuts by major central banks amid resurfacing inflation concerns. A sharp rise in natural gas and crude oil prices, triggered by the formal closure of the Strait of Hormuz and the ongoing suspension of Qatari LNG exports, has heightened concerns about sustained inflationary pressures across Europe, potentially prompting the European Central Bank to take a more hawkish approach to monetary policy. Investors are also awaiting the release of crucial inflation data from the Eurozone later today, which may offer clearer signals on price trends and the likely direction of monetary policy in the region.

France’s 10-year OAT yield rose to 3.29%, rebounding from Friday’s eight-month low of 3.217%, as escalating tensions in the Middle East unsettled global markets and prompted investors to scale back expectations for interest rate cuts by major central banks amid renewed inflation concerns. Over the weekend, the US and Israel launched strikes on Iran, resulting in the reported death of Iran’s Supreme Leader and the effective closure of the Strait of Hormuz. Iran retaliated with missile and drone attacks across the region, further heightening geopolitical uncertainty. A sharp surge in oil and gas prices has intensified fears of renewed inflationary pressures across Europe, where gas inventories remain unusually low and significant replenishment will be required ahead of next winter. Investors are also monitoring key data releases this week, including flash Eurozone CPI figures for February.