France’s 10-year bond yield rose to around 3.48%, returning to levels last seen in March, in line with European peers, as traders reassessed the Federal Reserve’s signals of potential interest rate cuts and any impact in Europe.
At the Jackson Hole Economic Symposium, Fed Chair Jerome Powell said the central bank will “proceed carefully” but suggested that changes to interest rates might be needed due to “shifting risks.” Meanwhile, ECB policymakers signaled an extended pause, with President Christine Lagarde noting the eurozone’s labor market resilience despite inflation and aggressive rate hikes.
Unlike the Fed, the ECB has already implemented significantly more rate cuts this cycle—eight reductions to date—and held the deposit rate steady at 2% in July.
It now seems likely the ECB will maintain that rate next month as the eurozone economy shows unexpected resilience and inflation hovers around the 2% target.
Attention now turns to upcoming French inflation figures due on August 29.