French Bond Yields Ease Ahead of US Inflation

France’s 10-year OAT yield eased to 4.82% as investors awaited US inflation data for fresh clues on the Federal Reserve’s rate path. Despite the decline, borrowing costs remain near their highest levels in more than two decades, amid concerns over record public debt and political obstacles to fiscal consolidation. The government aims to reduce the budget deficit to 5% of GDP by 2027, but securing parliamentary support for significant spending cuts remains uncertain ahead of next year’s presidential election. Meanwhile, ECB President Christine Lagarde said elevated energy-driven inflation has yet to spread across the broader euro-area economy, supporting a wait-and-see approach. However, persistent inflation pressures and the ongoing US-Iran conflict have prompted markets to price in another ECB rate hike in December, following two increases earlier this year.

France’s 10-year OAT yield fell to 4.85%, tracking US Treasury yields lower following a US market holiday. Oil prices also ended a three-session rally as Russia eased diesel export restrictions, tempering supply concerns. Despite the decline, French borrowing costs remain near their highest levels in more than two decades, amid concerns over record public debt and political hurdles to fiscal consolidation. The government aims to narrow the budget deficit to 5% of GDP in 2027, but securing parliamentary backing for significant spending cuts remains uncertain ahead of next year’s presidential election. Last week, EU officials urged Paris to present a credible budget in line with the bloc’s fiscal rules, while French lawmakers are due to begin debating revenue measures this week. Investors are also awaiting Wednesday’s US CPI report and ECB policymakers’ remarks at the IMF–World Bank annual meetings for further clues on the monetary policy outlook.

France’s 10-year OAT yield rose to 4.9%, approaching the more than two-decade high of 5.03% reached earlier this month, as oil prices rebounded following a deadly attack on Riyadh’s airport in Saudi Arabia, while Ukraine reported continued Russian strikes on its energy infrastructure. French bonds also remained under pressure amid concerns over record-high public debt and political obstacles to fiscal consolidation. The government aims to reduce the budget deficit to 5% of GDP in 2027, but securing parliamentary approval for substantial spending cuts remains uncertain ahead of next year’s presidential election. Last week, EU officials urged Paris to present a credible budget and comply with the EU fiscal framework, with French lawmakers set to begin debating the budget’s revenue measures this week. Investors are also awaiting Wednesday’s US CPI report and remarks from ECB policymakers at the IMF-World Bank annual meetings for further clues on the monetary policy outlook.