The yield on France’s 10-year government bond slipped below 3.45%, its lowest level since late October, as investors monitored progress in France’s budget negotiations while maintaining optimism that the US government shutdown could soon be resolved. At the same time, weaker US jobs data strengthened expectations that the Fed could cut interest rates next month, while ECB officials maintained a cautious tone, suggesting that borrowing costs in the bloc are likely to remain steady in the near term. Domestically, the French Parliament approved the revenue component of the 2026 Social Security financing bill, clearing the way for Wednesday’s debate on the expenditure portion, which will include discussions on a key provision to suspend parts of the 2023 pension reform. Meanwhile, Bank of France Governor François Villeroy de Galhau said the central bank is likely to raise its growth forecasts for 2025 and 2026, citing the French economy’s resilience despite ongoing political turbulence.
