French government bonds found relief on Tuesday as yields on Eurozone and U.S. debt slipped, allowing pressure on French peers to ease. The 10-year U.S. Treasury yield fell 1.5 basis points to 5.120%, while the 30-year yield declined 2.2 basis points to 5.451%. The 10-year German Bund yield dropped 2.3 basis points to 3.435%, and French 10-year OAT yields lost 1.6 basis points to 4.919%.
Yields retreated after recent sharp increases, though concerns over inflation persist. Markets are also weighing ongoing protests and budget issues in France, which underscore broader global debt challenges. "Latest dynamics show signs of global, not just French debt crisis," said Commerzbank rates strategist Christoph Rieger.
The 10-year OAT-Bund yield spread remained elevated at 144 basis points, up from 147 on Monday and nearing levels last seen during the 2012 sovereign debt crisis. Risk premiums for French OATs are in uncharted territory, according to Citi rates strategist Jamie Searle, who added that sentiment is currently driving market direction.
France’s National Assembly is set to vote on the revenue section of the 2027 draft budget bill, with the process growing more uncertain amid recent social unrest. Black Rock Investment Institute noted that while spillover risks from France deserve attention, today’s situation differs from the 2011–2012 eurozone crisis, with stronger banks and ECB tools offering more resilience. Still, the firm remains neutral on eurozone bonds and prefers opportunities elsewhere.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing