FX.co ★ French 10-Year Bond Yield Falls to New 1-Month Low

France's 10-year OAT bond yield has declined to approximately 3.38%, marking its lowest point since March 4th. This shift comes as investors increasingly anticipate potential rate cuts by the European Central Bank due to worries that a burgeoning trade conflict may hinder global economic growth. Recently, U.S. President Donald Trump announced a 10% baseline tariff on all U.S. imports alongside increased tariffs on significant trading partners, which include a 20% tariff on EU imports, effective from April 9. Consequently, the money markets have adjusted, now suggesting a more than 90% probability of a 25 basis point ECB rate reduction in April, up from about 80% the prior day. Additionally, expectations for the December deposit rate have decreased to 1.8% from 1.9%. On the economic front, investors are also evaluating critical data: preliminary CPI figures reveal that France's inflation rate remains stable at a four-year low of 0.8% in March, while the Euro Area inflation has eased to 2.2%, the lowest level since November 2024. Furthermore, PMI data shows a continued contraction in France’s service sector, although the rate of contraction has moderated.