29.10.202610:01:54UTC+00French Bond Yields Ease as Investors Await ECB Decision

France’s 10-year OAT yield declined to 4.9% as oil prices fell and investors looked ahead to the European Central Bank’s upcoming policy decision. Nevertheless, French government bonds remain under pressure amid mounting worries about the country’s fiscal trajectory in the run-up to next year’s presidential election, while episodes of civil unrest have further complicated the outlook for President Emmanuel Macron’s administration.

Brent crude prices retreated following reports that US Vice President JD Vance had moved to revive peace talks with Iran. Against this backdrop, the ECB is widely expected to keep interest rates on hold in the face of slowing economic growth, with market participants concentrating on any guidance about its future policy stance.

Euro short-term rate forwards suggest the ECB deposit facility rate could rise from its current 2.50% to around 2.73% by December and 3.23% by late 2027. Although inflation remains under pressure from elevated energy costs, policymakers are choosing to wait and evaluate potential second-round effects before implementing further policy changes.