The yield of French bonds remains near the maximums since 2002 against the background of the forecast of the budget deficit at 5.4% and the political crisis. The sale of French securities puts pressure on the European debt market.
The yield of French government bonds remains near the maximum levels since 2002. Against this background, investors note the forecast of the country's budget deficit at 5.4% of GDP and the ongoing political crisis.
Sales of French securities put pressure on the entire European sovereign debt market, including the bonds of Southern European countries. The yield of two- and ten-year French bonds remains near the 2002 peaks, while ten-year papers consolidate around 4.897%. The short-term segment shows signs of stabilization: the yield is moving toward the first weekly decline in nine weeks, interrupting the longest growth series since 2022.
Earlier in the week, Paris's budgetary problems, related to the deficit forecast and the political deadlock around the 2027 budget project, pushed yields up — to 4.95% and 2023 levels. The proposal of far-right leader Marine Le Pen to cut spending by 140 billion euros brought only temporary relief. Investors remain skeptical about the possibility of implementing such measures legislatively.
The situation in France is developing against the background of stabilization in the American bond market after a volatile week. The yield of ten-year US Treasury bonds has hardly changed and amounted to 5.231%, remaining below the previously reached maximum of 5.364%. The record weekly inflow of funds into US bond funds, according to Reuters, reached 19.78 billion dollars. Successful auctions for the placement of US debt also contributed to reducing pressure on global rates.
Macroeconomic expectations influence the trajectory of the Federal Reserve's policy. The probability of keeping rates unchanged at the October FOMC meeting is estimated by the markets at 82%, while the chances of an increase in December remain at around 81%.