France’s Borrowing Costs Surge to 17-Year High Amid Iran Tensions

2026-03-27 09:12 By Joana Ferreira 1 min. read

France’s 10-year OAT yield approached 3.9%, reaching levels not seen since June 2009 and on track to end March up over 60 basis points, as the Iran crisis sends energy prices spiraling and forces a dramatic repricing of ECB policy expectations from anticipated cuts to at least two rate hikes this year, with a third possible.

The standoff intensified after President Trump extended his deadline for Iran to reopen the Strait of Hormuz, while clashing reports from Washington and Tehran cast doubt on diplomatic progress.

Though German Foreign Minister Johann Wadephul confirmed indirect talks and upcoming direct negotiations in Pakistan, markets dismiss the prospect of a quick deal, seeing the extension as a move to strengthen military positioning.

Compounding concerns, Spain’s inflation spiked to 3.3%, its sharpest rise since June 2024, amid soaring fuel costs, signaling broader inflationary risks across Europe.



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