FX.co ★ France’s Bond Yields Ease as Markets Look Beyond Fitch Downgrade to Fed Decision

On Monday, the yield on France’s 10-year government bond eased to 3.49%, having momentarily reached a one-week peak of 3.516%. This shift in investor attention comes as focus moves from France's recent credit rating downgrade to an eventful week of central bank meetings. The U.S. Federal Reserve is anticipated to reduce rates by at least 25 basis points on Wednesday, amid concerns about its independence, as policymakers weigh a cooling labor market against inflation driven by tariffs. Meanwhile, both the Bank of England and the Bank of Japan are expected to maintain their current borrowing costs. Domestically, Fitch Ratings downgraded France's sovereign credit rating to A+ from AA-, marking a historic low due to political instability and escalating debt. This decision follows closely on the heels of President Emmanuel Macron appointing his fifth prime minister in two years, subsequent to the resignation of François Bayrou, who was unable to garner support for measures involving tax increases and budget cuts.