30.03.202609:31:52UTC+00French 10-Year Yield Remains High as Inflation Fears Drive ECB Hike Bets

France’s 10-year OAT yield hovered just above 3.8%, near its highest level since June 2009, and was on track to end March about 60 basis points higher. Investor sentiment remained cautious amid concerns over the economic fallout from the protracted conflict in the Middle East, with reports of US troop deployments in preparation for a possible ground operation overshadowing claims of diplomatic progress.

Adding to the pressure, flash CPI readings from Germany and Spain signaled building inflationary pressures, while a Eurozone business survey revealed a sharp deterioration in sentiment as inflation expectations rose. In response, markets have radically adjusted their view of future ECB policy, now pricing in at least two rate hikes in 2026—and potentially a third—scrapping earlier bets that had assigned around a 40% probability to a rate cut.

French central bank governor François Villeroy de Galhau reaffirmed the ECB’s resolve to rein in energy-driven inflation, but stressed that it is still “premature” to discuss the precise timing of any rate moves.