France’s 10-year OAT yield slipped toward 3.4%, marking its lowest level since late November, after ECB policymaker Martin Kocher warned that further euro strength could prompt the central bank to resume interest rate cuts.
Markets slightly raised expectations for a summer easing, with the implied probability of a 25bp July cut climbing to around 25% from roughly 15% earlier.
The euro surpassed $1.2 for the first time since June 2021, supported by broad dollar weakness after US President Donald Trump called the greenback “great,” despite it hitting a near four-year low.
French bond yields also eased amid political developments as investors welcomed the government’s push to advance the 2026 budget.
On Tuesday, it survived two no-confidence votes over its decision to pass the expenditure portion without a final National Assembly vote, having faced similar motions on the revenue side last week.
The full 2026 budget now moves to the Senate before returning to the lower house for approval.