FX.co ★ France 10-Year OAT Yield Falls to Near 2-Month Low

The yield on France's 10-year OAT fell below 3.5%, marking its lowest point since November 28. This decline came as investors reviewed unexpectedly weak PMI data and noted progress on finalizing the 2026 state budget. In January, France's private sector activity experienced an unforeseen contraction, with a slowdown in services dampening manufacturing gains. Politically, the French government successfully navigated two no-confidence votes regarding its fiscal plans last Friday. Prime Minister Sébastien Lecornu utilized Article 49.3 of the constitution to pass the revenue portion of the 2026 budget after lawmakers failed to approve it by the end of 2025. He is likely to employ the same article again to advance the budget's expenditure section. Meanwhile, tensions over US-Europe trade appeared to ease when President Donald Trump indicated that he would refrain from imposing tariffs on European goods, responding to opposition to his plan concerning Greenland.