FX.co ★ France 10-Year Yields Tick Higher

The yield on France's 10-year OAT has inched closer to 3.6%, reaching a one-week peak due to a slight global increase in borrowing costs following the Bank of Japan's decision to raise interest rates to levels unseen since 1995. In Europe, the European Central Bank (ECB) maintained its December meeting's status quo on interest rates, with President Christine Lagarde confirming that neither hikes nor cuts were considered, prompting money markets to lower their expectations for a rate hike next year. Meanwhile, the Bank of France has updated its GDP projections, raising its 2025 forecast to 0.9% from 0.7% and its 2026 forecast to 1% from 0.9%. This is attributed to robust performance in the transport and aviation sectors, alongside anticipated improvements in consumer spending and investment. Despite anticipating stronger economic growth, the central bank maintains a cautious view on inflation, adjusting the 2025 forecast downwards to 0.9% from 1%, holding 2026 steady at 1.3%, and revising 2027 from 1.8% to 1.3%. On the fiscal front, French parliamentarians are engaged in ongoing deliberations over the 2026 budget, with a target of reaching a consensus by December 23; failure to do so might necessitate emergency fiscal measures.