France’s OAT Yield Jumps as Iran War Drives ECB Hike Fears

France’s 10-year OAT yield fell back to 3.75%, pulling away from an earlier high of 3.87%, its highest since July 2009, after markets initially reacted to President Trump’s five-day delay in planned strikes on Iran, which he attributed to "very good and productive" talks with Tehran. However, Iran’s Fars News Agency contradicted this, stating there were no negotiations with the US and that Trump’s decision came after Iran threatened to strike all West Asian power plants. Despite the diplomatic uncertainty, traders continue to anticipate at least three ECB rate hikes this year, following the central bank’s decision last week to hold rates steady while raising inflation forecasts and cutting growth projections, citing escalating risks from the Middle East conflict and rising energy prices.

France 10Y Bond Yield rose above 3.7, according to over-the-counter interbank yield quotes for this government bond maturity.

France’s 10-year OAT yield jumped above 3.85%, the highest since mid-2009, as the US-Israel-Iran conflict entered its fourth week and soaring energy prices amplified expectations of ECB tightening. Oil rallied after Iran threatened strikes on Israel’s power infrastructure and US supply chains, escalating tensions following Trump’s ultimatum to cripple Iran’s energy sector if the Strait of Hormuz remains blocked. Markets now anticipate three ECB rate hikes in 2026, overshadowing the bank’s recent decision to hold rates. The ECB also raised inflation forecasts and cut growth projections for the next three years, citing the impact of the deepening crisis on Europe’s economic outlook.