France 10Y Bond Yield Hits 18-year High

France’s 10-year OAT yield jumped to 4.6%, its highest level since July 2008, as oil prices rebounded amid continued uncertainty surrounding US-Iran talks and investors digested stronger-than-expected PMI data. Eurozone private-sector activity expanded in September at its fastest pace in nearly three and a half years, reinforcing expectations that the European Central Bank could raise interest rates further this year. ECB official Joachim Nagel said rising oil prices were becoming increasingly important for monetary policy, while Chief Economist Philip Lane warned that another energy-price surge could keep inflation elevated for longer. In the US, hawkish Fed comments and strong PMI data also lifted expectations for further rate hikes. Meanwhile, concerns over France’s public finances continued to weigh on sentiment, as the government struggles to rein in spending. The budget deficit is now expected to widen to 5.4% of GDP this year, up from 5.1% in 2025.

France 10 Year Government Bond Yield increased to 4.59%, the highest since July 2008. Over the past 4 weeks, France 10Y Bond Yield gained 45.18 basis points, and in the last 12 months, it increased 100.85 basis points.

French 10-year OAT yield fell below 4.5%, retreating from last week's 18-year highs as oil prices continued to fall amid tentative signs of easing geopolitical tensions and stronger regional supply. Meanwhile, concerns over the country’s finances intensified after Scope Ratings downgraded the country to A+ from AA-, citing rising debt, persistent deficits and limited progress on structural reforms. Morningstar DBRS also shifted its outlook on France’s AA rating to negative. The warnings come as the government struggles to rein in spending, with the budget deficit now expected to widen to 5.4% of GDP this year, from 5.1% in 2025. French bond spreads have already widened sharply, with the 10-year OAT-Bund premium briefly exceeding 100 basis points for the first time in 14 years. Political uncertainty ahead of next year’s presidential election is further complicating efforts to secure support for the government’s planned fiscal consolidation.