France 10Y Bond Yield Hits 18-year High

France’s 10-year OAT yield fell below 4.75% after reaching its highest level since July 2008, as investors weighed ECB President Christine Lagarde’s comments against fresh inflation data and elevated oil prices. French bonds remain under pressure from fiscal concerns ahead of the 2027 election, with a large primary deficit and fragmented parliament complicating efforts to consolidate public finances. Lagarde said the recent inflation surge has yet to generate significant second-round effects, suggesting a measured ECB response. However, with eurozone inflation above 3% and potentially nearing 4% by year-end, markets are pricing in up to four additional rate hikes over the next year, with the ECB expected to resume tightening in December when fresh projections are released. In the US, investors see another rate hikes as soon as October.

France 10 Year Government Bond Yield increased to 4.77%, the highest since July 2008. Over the past 4 weeks, France 10Y Bond Yield gained 58.59 basis points, and in the last 12 months, it increased 123.28 basis points.

France’s 10-year OAT yield rose above 4.75%, touching its highest level since July 2008, as elevated energy prices fuel concerns over renewed inflationary pressure and hawkish central-bank signals lift rate expectations. Money markets are now pricing in roughly 100 basis points of ECB rate hikes by late 2027, while investors in the US and UK have also increased bets on further tightening amid hawkish policymaker comments and resilient economic data. France remains under particular scrutiny ahead of the 2027 election, with a large primary deficit and heightened budget risks compounded by a fragmented parliament. Emergency energy-relief spending linked to the US-Iran war has further strained public finances, putting the deficit-reduction target out of reach. The budget deficit is now expected to widen to 5.4% of GDP this year, from 5.1% in 2025.