FX.co ★ France’s OAT Yield Jumps as Iran War Drives ECB Hike Fears

The yield on France’s 10-year OAT climbed above 3.85%, its highest level since mid‑2009, as the US–Israel–Iran conflict entered its fourth week and surging energy prices reinforced expectations of further ECB tightening. Oil prices rallied after Iran threatened to strike Israel’s power infrastructure and US supply chains, intensifying tensions following Trump’s ultimatum to cripple Iran’s energy sector if the Strait of Hormuz remains blocked. Markets now expect three ECB rate increases in 2026, overshadowing the bank’s recent decision to keep rates unchanged. At the same time, the ECB raised its inflation forecasts and lowered its growth projections for the next three years, citing the deepening crisis and its impact on Europe’s economic outlook.