FX.co ★ France’s OAT Yield Hits February High Amid Inflation Risks

France’s 10-year OAT yield rose above 3.4%, its highest level since February 9, as investors reacted to stronger-than-expected Eurozone inflation data and mounting tensions in the Middle East. February data showed annual Eurozone headline inflation at 1.9% and core inflation at 2.4%, both overshooting market forecasts. Pressure on bond markets was further intensified by a sharp rise in energy prices, with natural gas and crude oil surging following the formal closure of the Strait of Hormuz and the continued suspension of Qatari LNG exports. The jump in energy costs is expected to prolong inflationary pressures across Europe, potentially encouraging the European Central Bank to retain a hawkish policy stance. At the same time, US President Donald Trump stated that the military campaign against Iran could last four to five weeks, while stressing that US forces are prepared to extend operations if necessary.