French OAT Yields Climb on Fiscal Concerns

2026-10-07 08:46 By Joana Ferreira 1 min. read

France’s 10-year OAT yield climbed above 4.9%, approaching the more than two-decade high above 5% reached late last week, as fiscal concerns persisted and oil prices returned to focus.

French borrowing costs have risen amid elevated energy prices, inflation and rate expectations, while French debt has been hit particularly hard by concerns over the government’s ability to rein in spending ahead of the 2027 presidential election.

Paris’ 2027 budget plan proposes unpopular spending cuts aimed at reducing the deficit to 5% of GDP next year, but a lack of credibility and a divided parliament could make the target difficult to achieve.

Meanwhile, Brent crude rose as Iran intensified attacks on shipping in the Strait of Hormuz, reinforcing expectations for further rate hikes from major central banks.

The ECB is now seen hiking twice more by March 2027, while swaps price around 75 basis points of tightening by the end of next year.



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