France’s 10-year OAT yield held just below 3.4%, hovering at its lowest level since late November, as investors scaled back expectations for imminent Federal Reserve rate cuts following stronger-than-expected US labor data. Nonfarm payrolls rose by 130,000 in January, the largest monthly gain in more than a year, while the unemployment rate unexpectedly fell to 4.3%, highlighting continued labor market resilience at the start of 2026. Markets now see a Fed rate cut as fully priced in for July rather than June, with the probability of a move in March falling below 5%.
In the euro area, investors also digested signals that the European Central Bank remains largely unconcerned about the euro’s recent appreciation, alongside reports that Bank of France Governor François Villeroy de Galhau — widely viewed as a dovish policymaker — will step down ahead of schedule. ECB President Christine Lagarde recently characterized the inflation outlook as being in a “good place,” while downplaying the impact of the stronger currency.
