FX.co ★ French Yields Surge as Confidence Vote Looms

France’s 10-year government bond yield surged towards 3.6%, marking its highest point since mid-March. Additionally, the cost of 30-year borrowing reached levels unseen since 2011, highlighting growing fiscal concerns throughout Europe. Prime Minister François Bayrou, who was appointed by President Macron just nine months ago, unexpectedly announced a confidence vote scheduled in the National Assembly for September 8. His position remains precarious due to increasing opposition towards his proposals, which include a budget freeze for 2026 and the elimination of two public holidays—actions that have been widely criticized across the political spectrum. Simultaneously, investor apprehension is mounting over Europe’s increasing defense expenditures and Germany’s intended infrastructure developments. Furthermore, inflation within the eurozone accelerated to 2.1% in August, slightly surpassing market expectations and the European Central Bank’s (ECB) 2% target. This development strengthens the anticipation that the ECB will uphold current interest rates at its upcoming meeting.