French OAT Yields at 2008 High on Rate-Hike Bets, Budget Risks
France’s 10-year OAT yield rose to 4.7%, its highest level since 2008, as elevated energy prices fuel concerns over renewed inflationary pressure and hawkish central-bank signals lift rate expectations. Money markets are now pricing in roughly 100 basis points of ECB rate hikes by late 2027, while investors in the US and UK have also increased bets on further tightening amid hawkish policymaker comments and resilient economic data. France remains under particular scrutiny ahead of the 2027 election, with a large primary deficit and heightened budget risks compounded by a fragmented parliament. Emergency energy-relief spending linked to the US-Iran war has further strained public finances, putting the deficit-reduction target out of reach. The budget deficit is now expected to widen to 5.4% of GDP this year, from 5.1% in 2025.
7%, its highest level since 2008, as elevated energy prices fuel concerns over renewed inflationary pressure and hawkish central-bank signals lift rate expectations. Money markets are now pricing in roughly 100 basis points of ECB rate hikes by late 2027, while investors in the US and UK have also increased bets on further tightening amid hawkish policymaker comments and resilient economic data. France remains under particular scrutiny ahead of the 2027 election, with a large primary deficit and heightened budget risks compounded by a fragmented parliament.
Emergency energy-relief spending linked to the US-Iran war has further strained public finances, putting the deficit-reduction target out of reach. 1% in 2025.