FX.co ★ France OAT Yields Near Multi-Month High

The yield on France’s 10-year OAT is approaching 3.6%, edging close to its highest point since late September. This movement reflects investor anticipation of a hawkish rate cut by the Federal Reserve expected later today. Additionally, market sentiment is being influenced by progress on France's 2026 budget. The National Assembly narrowly passed next year’s social-security bill with a margin of just 13 votes, a small victory for Sébastien Lecornu’s minority government, which now faces the uncertain task of passing the state budget. The French government is targeting a budget deficit reduction to under 5% of GDP next year, as it currently stands among the highest within the euro area. Concurrently, investors have scaled back their expectations for further rate cuts from the European Central Bank. This adjustment follows remarks from Governing Council member Gediminas Simkus, who told Bloomberg that further easing was not required given that inflation is “more or less close to target,” echoing similar statements from Isabel Schnabel earlier this week.