FX.co ★ France 10-Year OAT Yield Rebounds as Middle East Tensions Stoke Inflation Fears

France’s 10-year OAT yield climbed to 3.25%, rebounding from Friday’s eight-month low of 3.217%, as escalating tensions in the Middle East rattled global markets and led investors to trim expectations for interest rate cuts by major central banks amid renewed inflation worries. Over the weekend, the US and Israel carried out strikes on Iran, reportedly killing the country’s Supreme Leader and effectively shutting the Strait of Hormuz. Iran responded with missile and drone attacks across the region, further amplifying geopolitical uncertainty. A sharp jump in oil and gas prices has intensified concerns about a resurgence of inflationary pressures across Europe, where gas inventories remain unusually low and substantial restocking will be needed before next winter. Investors are also closely watching key data releases this week, including the flash Eurozone CPI reading for February.