12.10.202609:09:15UTC+00French Bond Yields Little-Changed as Fiscal Concerns Persist

France’s 10-year OAT yield hovered around 4.86%, easing slightly from its highest level in more than two decades as the recent drop in oil prices led markets to scale back expectations of further tightening by the European Central Bank. Even so, French bonds remained under pressure amid mounting concerns over the country’s record-high public debt and the political obstacles to fiscal consolidation.

The government’s 2027 budget targets a reduction in the fiscal deficit to 5% of GDP, but it is unclear whether substantial spending cuts can win parliamentary approval, given a deeply fractured legislature and the approach of next year’s presidential election. During October’s Eurogroup meeting, EU officials pressed Paris to present a credible budget and to honor its commitments under the EU’s fiscal rules. French lawmakers are due to begin debating the budget’s revenue measures this week.

Investors are also closely monitoring Wednesday’s US CPI release and comments from ECB policymakers at the IMF–World Bank Annual Meetings for further signals on the monetary policy outlook.