FX.co ★ French Bond Yields Edge Up but Post Weekly Decline

France’s 10-year OAT yield rose above 3.65% by the end of a turbulent week but was still on track for a 2-basis-point weekly decline, largely thanks to Wednesday’s sharp 21-basis-point plunge. Despite this pullback, borrowing costs across Europe remain elevated as escalating US-Iran tensions threaten a fragile ceasefire. The flare-up has driven oil prices higher, reviving inflation concerns and strengthening expectations of a more hawkish European Central Bank. Markets are now pricing in at least two ECB rate hikes by the end of 2026, with roughly a 30% chance of a third. At the same time, Iran is maintaining an almost complete blockade of the Strait of Hormuz, demanding Lebanon’s participation in peace talks, while US President Donald Trump has condemned Iran’s management of oil shipments through the crucial chokepoint. Pakistan is scheduled to host talks between the two parties this Saturday.