French 10-Year Bond Yield Hits 4.7%, Highest in 18 Years

【French 10-Year Bond Yield Rises to 4.7%, Highest in 18 Years】

⑴ France's 10-year government bond yield rose to a 18-year high of 4.7%, as high oil prices and stronger economic data reinforced expectations of further monetary policy tightening by the European Central Bank.

⑵ France is under particular scrutiny as it heads toward the 2027 election, facing a substantial primary deficit and heightened budget risks amid a fragmented parliament.

⑶ Brent crude oil rose as escalating tensions in the Middle East clouded the prospects for a diplomatic resolution to the US-Iran conflict.

⑷ Meanwhile, data released on Wednesday showed that private sector activity in the eurozone expanded at its fastest pace in nearly three and a half years, while French output grew for the first time in 10 months.

⑸ Money markets currently price in at least a 25 basis point rate hike by the European Central Bank before year-end, with a roughly 40% probability of a second hike.

⑹ In the United States, investors have also increased their bets on further rate hikes by the Federal Reserve following hawkish remarks from policymakers and stronger-than-expected PMI data.