French OAT Yields Rise

France’s 10-year OAT yield climbed back to 4.95%, as investors remained cautious ahead of Tuesday’s US midterm elections. Sentiment also remained under pressure from concerns over France’s fiscal outlook after Fitch Ratings unexpectedly revised the country’s outlook to negative, citing deteriorating public finances, elevated government debt and borrowing costs, weaker economic growth and persistent political uncertainty. Meanwhile, hawkish comments from European Central Bank officials on Friday, just hours after the central bank left interest rates unchanged, suggested that monetary tightening may have been delayed rather than ruled out, keeping the prospect of a December rate hike on the table. Across the Atlantic, US voters head to the polls, with the outcome of the House and Senate races closely watched by investors for potential implications for financial markets and broader risk sentiment.

France’s 10-year OAT yield fell to 4.9%, tracking renewed declines in oil prices despite persistent concerns over the country’s fiscal outlook. Oil prices retreated after reports suggested US President Donald Trump was willing to give diplomacy with Iran more time before considering renewed military strikes following Tuesday’s midterm elections. Meanwhile, Fitch Ratings revised France’s outlook to negative, citing deteriorating public finances, high government debt, elevated borrowing costs, weaker growth and political uncertainty. The agency expects public debt to rise from 115.7% of GDP in 2025 to 124% by 2028, while the budget deficit is projected to remain at 5.5% next year, above the government’s 5% target. Elsewhere, the ECB kept interest rates unchanged on Thursday. President Christine Lagarde confirmed that a rate hike had been discussed, but policymakers unanimously opted to hold borrowing costs steady, citing tighter financial conditions as a factor helping contain inflation.

France’s 10-year OAT yield climbed to 4.95%, tracking a rebound in oil prices amid concerns that the US could resume military strikes against Iran. Persistent worries over France’s fiscal outlook and an unexpected economic contraction also weighed on sentiment. Eurozone data released on Friday showed slower economic growth in Q3, with France contracting 0.1% as falling exports and investment dragged on output. Social unrest and political uncertainty ahead of next year’s presidential election added to pressure on French bonds, pushing OAT yields to their highest levels in more than two decades. Meanwhile, inflation remained persistent across the region. On the monetary policy front, the ECB kept interest rates unchanged, offering little guidance on its future policy path. President Christine Lagarde confirmed that a rate hike had been discussed, but policymakers unanimously opted to hold rates steady, noting that tighter financial conditions were helping to contain price pressures.