03.02.202608:59:02UTC+00French 10-Year OAT Steadies Near Two-Month Low

The yield on France's 10-year OAT remained steady at approximately 3.45%, marking its lowest point since late November. This stability comes as investors assessed weaker-than-anticipated inflation data in anticipation of the European Central Bank's policy decision set for Thursday. France's EU-harmonized consumer price index experienced a modest increase of just 0.4% year-on-year in January 2026, which represents the lowest rate since December 2020 and falls short of market predictions of a 0.6% rise. Overall market expectations suggest that the ECB will maintain current interest rates while policymakers consider the implications of a weakening US dollar and a surge in inexpensive Chinese imports on the inflation forecast. Concurrently, the French parliament formally ratified the 2026 state budget on Monday. This resolution ended a prolonged deadlock that had raised worries about escalating fiscal challenges within the Eurozone's second-largest economy. Initially, Prime Minister Sébastien Lecornu aimed for a 2026 deficit target of 4.7% of GDP, but compromises with various political factions adjusted the target closer to 5%.