The yield on France’s 10-year OAT climbed to 4.6%, its highest level since July 2008, as oil prices rebounded amid ongoing uncertainty over US–Iran negotiations and investors digested stronger-than-expected PMI figures. Eurozone private-sector activity expanded in September at its fastest pace in nearly three and a half years, bolstering expectations that the European Central Bank may implement further interest rate increases this year.
ECB official Joachim Nagel noted that rising oil prices are becoming an increasingly important factor for monetary policy, while Chief Economist Philip Lane cautioned that a renewed surge in energy costs could keep inflation elevated for a longer period. In the United States, hawkish remarks from Federal Reserve policymakers and robust PMI data have similarly strengthened expectations of additional rate hikes.
At the same time, persistent concerns over France’s public finances continued to weigh on market sentiment, as the government struggles to curb spending. The budget deficit is now projected to widen to 5.4% of GDP this year, compared with 5.1% in 2025.
