France’s 10-year OAT yield stood at 3.53%, near its lowest level since early December and on track for a weekly decline of around 8 basis points, after retreating from near multi-year highs. Investors digested a mix of economic data and reassessed the monetary policy outlook for 2026. Household spending and industrial production in France unexpectedly contracted in November, while eurozone inflation eased to 2%, reducing concerns about ECB rate hikes and reinforcing expectations that policy rates will remain unchanged through 2026. At the same time, political and fiscal risks remain elevated. France’s 2026 budget has yet to receive formal approval, with negotiations resuming this year but progressing slowly. Meanwhile, parliament has passed temporary and special budget measures, allowing selected spending items to proceed and ensuring continuity of government operations.