France’s 10-year OAT yield slipped to 4.85%, mirroring the move lower in US Treasury yields after the US market holiday. Oil prices also snapped a three-session rally as Russia relaxed restrictions on diesel exports, easing earlier supply concerns.
Even with the pullback, French borrowing costs remain close to their highest levels in more than two decades, reflecting persistent worries over record public debt and the political challenges of fiscal consolidation. The government is targeting a reduction of the budget deficit to 5% of GDP by 2027, but winning parliamentary support for substantial spending cuts remains uncertain in the run-up to next year’s presidential election.
EU officials last week pressed Paris to submit a credible budget consistent with the bloc’s fiscal rules, while French lawmakers are set to begin debating revenue measures this week. Markets are also focused on Wednesday’s US CPI release and on comments from ECB policymakers at the IMF–World Bank annual meetings, seeking further guidance on the monetary policy outlook.
