French Bond Yields Climb
France's 10-year OAT yield rose towards 4.8% as investors reassessed expectations of December interest rate hikes by the Federal Reserve and the ECB, while ongoing political and fiscal uncertainties continued to weigh on French debt. These pressures outweighed the relief from falling oil prices after US President Donald Trump played down the prospect of further strikes on Iran. Bond markets initially rallied last week after the Democrats' sweep in the US midterm elections raised expectations of political gridlock and more limited fiscal spending. However, yields reversed course on Friday as stronger-than-expected US employment data pushed the implied probability of a December Fed rate hike to 81%. Expectations of an ECB rate increase are more modest at 66%, reflecting the Eurozone's weaker growth outlook. European bond markets also face uncertainty surrounding the ECB leadership transition, following President Christine Lagarde's announcement that she intends to step down early.
France's 10-year OAT yield rose towards 4.8% as investors reassessed expectations of December interest rate hikes by the Federal Reserve and the ECB, while ongoing political and fiscal uncertainties continued to weigh on French debt. These pressures outweighed the relief from falling oil prices after US President Donald Trump played down the prospect of further strikes on Iran. Bond markets initially rallied last week after the Democrats' sweep in the US midterm elections raised expectations of political gridlock and more limited fiscal spending.
However, yields reversed course on Friday as stronger-than-expected US employment data pushed the implied probability of a December Fed rate hike to 81%. Expectations of an ECB rate increase are more modest at 66%, reflecting the Eurozone's weaker growth outlook. European bond markets also face uncertainty surrounding the ECB leadership transition, following President Christine Lagarde's announcement that she intends to step down early.