FX.co ★ France 10-Year Yields Slide as Political Uncertainty Eases

The yield on France’s 10-year OAT has decreased, approaching 3.3%, its lowest since mid-August, as investor sentiment improved due to eased political tensions. Prime Minister Sébastien Lecornu announced the suspension of the contentious pension reform until after the 2027 presidential election, aiming to prevent government destabilization and foster cross-party backing. Attention now turns to Lecornu’s 2026 budget proposal, which prioritizes deficit reduction. Regarding inflation, France’s consumer price index was confirmed at 1.2% for September, reaching an eight-month peak but still below the broader eurozone average. ECB President Christine Lagarde asserted that despite the budgetary pressures facing France, the eurozone bond market remains stable, emphasizing that the ECB is equipped to address potential market instability. Meanwhile, dovish comments from Powell have raised market expectations for further rate cuts in the United States.