28.08.202508:43:10UTC+00France 10-Year Bond Yield Eases But Risks Persist

The yield on France's 10-year bond decreased to approximately 3.49%, a slight drop from a peak of 3.54% observed in March, as of August 27. Despite this, market sentiment remained uneasy following an unexpected announcement from Prime Minister François Bayrou, who has scheduled a confidence vote for the coming month regarding his €44 billion budget proposal aimed at curbing France’s significant deficit. Facing strong opposition, Bayrou's administration seems unlikely to prevail, raising concerns over a potential political crisis less than one year into his tenure. This situation could potentially lead to new legislative elections and delay efforts to reduce the deficit. Should Bayrou's government collapse, French President Emmanuel Macron would need to swiftly appoint a new prime minister, although any successor may encounter similar challenges in securing parliamentary approval. Macron also has the option to initiate snap parliamentary elections, though he has shown hesitation, recalling last year's elections which resulted in a fragmented parliament without any party securing a majority.