France 10Y Bond Yield Hits 14-year High

France’s 10-year OAT yield moved back to 3.45% from 1-1/2-month highs touched early in the month, tracking a fall in global borrowing costs, amid hopes that a swift end to the Iran conflict would limit inflationary pressures. A temporary relief came after US President Trump said the military operation in Iran could conclude soon and is progressing well ahead of the initially projected four- to five-week timeline. Oil prices also retreated to below $100 per barrel after Trump hinted at several measures aimed at keeping energy costs under control. Last week, ECB Chief Economist Philip Lane warned that a prolonged conflict in the Middle East and a sustained decline in regional oil and gas supplies could trigger a “substantial spike” in inflation and a “sharp drop in output” across the EA. Against this backdrop, markets now expect the ECB to raise its key interest rate by at least 25bps once this year.

France 10 Year Government Bond Yield increased to 3.64%, the highest since November 2011. Over the past 4 weeks, France 10Y Bond Yield gained 19.64 basis points, and in the last 12 months, it increased 6.00 basis points.

France’s 10-year OAT yield jumped to around 3.63%, hitting its highest level since November 2011 amid rising inflation risks tied to the escalating Middle East conflict. The crisis has entered its second week with no clear resolution, raising concerns over disruptions to global energy supplies. Oil prices have climbed above $100 a barrel as key regional producers curb output and the Strait of Hormuz remains effectively closed, intensifying fears of sustained energy-driven inflation across Europe. This pushed markets to revise inflation expectations and strengthen bets that the European Central Bank may keep policy tighter for longer. Some policymakers have already cautioned that a prolonged conflict involving Iran could both lift eurozone inflation and dampen growth. Markets now price in two full 25-basis-point rate hikes by year-end, up from one last week, with the first move nearly fully priced by June.