France's OAT Yields Ease but Remain Close to Multi-Year Highs
France’s 10-year OAT yield fell below 4.75% after reaching its highest level since July 2008, as investors weighed ECB President Christine Lagarde’s comments against fresh inflation data and elevated oil prices. French bonds remain under pressure from fiscal concerns ahead of the 2027 election, with a large primary deficit and fragmented parliament complicating efforts to consolidate public finances. Lagarde said the recent inflation surge has yet to generate significant second-round effects, suggesting a measured ECB response. However, with eurozone inflation above 3% and potentially nearing 4% by year-end, markets are pricing in up to four additional rate hikes over the next year, with the ECB expected to resume tightening in December when fresh projections are released. In the US, investors see another rate hikes as soon as October.
75% after reaching its highest level since July 2008, as investors weighed ECB President Christine Lagarde’s comments against fresh inflation data and elevated oil prices. French bonds remain under pressure from fiscal concerns ahead of the 2027 election, with a large primary deficit and fragmented parliament complicating efforts to consolidate public finances. Lagarde said the recent inflation surge has yet to generate significant second-round effects, suggesting a measured ECB response.
However, with eurozone inflation above 3% and potentially nearing 4% by year-end, markets are pricing in up to four additional rate hikes over the next year, with the ECB expected to resume tightening in December when fresh projections are released. In the US, investors see another rate hikes as soon as October.