08.01.202609:55:17UTC+00France 10-Year OAT Yields Rebound but Remain Near Lows

France's 10-year OAT yield increased to around 3.54%, bouncing back from a one-month low of 3.50% seen on January 7. This rise was driven by short-covering activities and substantial government bond issuance, which provided moderate short-term gains. The eurozone is currently experiencing a surge in sovereign debt supply, with France planning to auction between €11.5 billion and €13.5 billion in long-dated bonds. Despite this increase, yields continue to hover near their lowest point since early December. This is largely due to eurozone inflation data showing a decrease to 2% last month, which has alleviated concerns of further interest rate hikes and bolstered expectations that the European Central Bank will maintain stable policy rates until 2026. Nonetheless, political and fiscal challenges remain significant. France's budget for 2026 has yet to be formally approved, as negotiations that resumed at the year's start are progressing slowly. In the interim, parliament has implemented temporary and special budget measures to ensure the continuity of government operations, approving selected expenditures on an incremental basis.