FX.co ★ French 10Y Bond Yield Set for Weekly Decline

The yield on France's 10-year OAT was recorded at 3.53%, marking its lowest point since early December. It is poised for a weekly drop of about 8 basis points, having decreased from its near multi-year peaks. This shift comes as investors absorbed a blend of economic indicators and reevaluated the future monetary policy for 2026. November saw an unexpected contraction in both household spending and industrial production in France. Simultaneously, inflation in the eurozone reduced to 2%, alleviating fears of potential rate hikes by the ECB and bolstering expectations that policy rates will remain steady through 2026. Despite this, political and fiscal risks continue to pose significant challenges. Notably, France's budget for 2026 is still awaiting formal approval, with ongoing negotiations progressing at a sluggish pace. Nonetheless, the parliament has enacted temporary and special budgetary measures, facilitating the continuation of specific expenditures and ensuring the seamless operation of government activities.