The yield on France’s 10-year OAT fell toward 3.3%, its lowest level since mid-August, as investor sentiment improved following eased political tensions. Prime Minister Sébastien Lecornu announced that the controversial pension reform would be suspended until after the 2027 presidential election, aiming to avoid a government collapse and secure cross-party support. Market focus now shifts to Lecornu’s 2026 budget plan, which targets deficit reduction. On the inflation front, France’s consumer price index was confirmed at 1.2% in September, marking an eight-month high but remaining below the broader eurozone average. ECB President Christine Lagarde said that despite France’s budgetary pressures, the eurozone bond market remains orderly and emphasized that the ECB has the tools to respond to potential market instability. Elsewhere, dovish remarks from Powell have bolstered market expectations of additional rate cuts in the US.
