France’s 10-year OAT yield held around 3.45%, hovering near its lowest level since late November, as investors digested weaker-than-expected inflation data ahead of the European Central Bank’s policy decision on Thursday. France’s EU-harmonized consumer price index rose just 0.4% year-on-year in January 2026, the weakest reading since December 2020 and below market expectations of a 0.6% increase. Markets broadly expect the ECB to leave interest rates unchanged, as policymakers evaluate how a softer US dollar and a surge of low-cost Chinese imports could shape the inflation outlook. Meanwhile, France’s 2026 state budget was finally approved by parliament on Monday, ending a months-long stalemate that had fueled concerns over rising fiscal risks in the eurozone’s second-largest economy. Prime Minister Sébastien Lecornu had initially targeted a 2026 deficit of 4.7% of GDP, but concessions to various political groups pushed the figure closer to 5%.
