FX.co ★ French Bond Yields Steady Near 4%

The yield on France’s 10-year government bond remains around 4%, close to its lowest point since October 23. This stability reflects investor focus on the ongoing budget discussions in Paris and relief following the resolution of the US government shutdown. On Wednesday, France’s National Assembly approved a measure to suspend the controversial pension reform after Prime Minister Sébastien Lecornu made a crucial concession to the Socialist Party. This move was strategized to prevent a no-confidence vote and ensure the government’s continuity. However, lawmakers still need to pass the broader social security bill in a final vote, which raises prospects for a comprehensive budget agreement. In parallel, François Villeroy de Galhau, the Governor of the Bank of France, hinted at potential upward revisions to the 2025–2026 growth forecasts, despite political uncertainties, praising the economy's resilience. Market expectations suggest that the European Central Bank (ECB) will maintain current interest rates. Meanwhile, in the United States, traders have scaled back expectations of a Federal Reserve rate cut in December, influenced by the reopening of the government and recent soft labor market data.