FX.co ★ France’s OAT Yields Fall as Budget Negotiations Continue

France's 10-year OAT yield dipped to 3.49%, marking its lowest point since early December, as the nation grapples with the approval of its 2026 budget. François Villeroy de Galhau, a member of the ECB Governing Council, has urged legislators to trim the budget deficit to a minimum of 5% of GDP, cautioning that exceeding this threshold could push France into a "danger zone." The delay in meeting the year-end deadline has led to temporary stop-gap measures, while negotiations continue amid ongoing uncertainty. Regarding monetary policy, markets anticipate that the European Central Bank will maintain its rates through 2026, boosted by the robust Eurozone economy and inflation aligning with targets. Concurrently, in the United States, investors are evaluating stronger-than-anticipated retail sales against a weaker-than-expected core inflation figure, pondering the potential impact on Federal Reserve rate cuts later in the year.