The yield on France’s 10-year OAT hovered around 3.46%, holding its lowest level in a month, as President Emmanuel Macron unveiled a new cabinet to contain a mounting political crisis. Sébastien Lecornu was reappointed last Friday, four days after his resignation, and has been tasked with submitting a revised budget. Failure to pass the budget could push the 2026 deficit to around 6%, up from the projected 5.4% for this year. However, the government could face a no-confidence vote in parliament later this week, increasing uncertainty over France’s fiscal outlook. On the macro front, market-implied probabilities of a 25-basis-point European Central Bank rate cut by July have risen to roughly 55%, compared with about 45% earlier, before President Trump’s threat to impose 100% tariffs on Chinese goods.
