France’s 10-year OAT yield fell to 3.35%, its lowest level since October 22, as investors awaited the release of US consumer price data later in the day for clearer guidance on the Federal Reserve’s policy path. The decline followed stronger-than-expected US labor market figures published on Wednesday, which tempered expectations of an imminent Fed rate cut.
Across Europe, investors also weighed indications that the European Central Bank remains largely unconcerned about the euro’s recent appreciation. Markets reacted to reports that Bank of France Governor François Villeroy de Galhau, viewed as a dovish policymaker, may leave his post earlier than previously anticipated.
ECB President Christine Lagarde said last week that the inflation outlook remains in a “good place,” while downplaying worries about the euro’s strength. Money markets are currently pricing in only about a 30% probability of an ECB rate cut by December.
