France: OAT Yields Fall to Lowest Since September.

France’s 10-year OAT yield fell to 4.7%, its lowest level since late September, as declining oil prices eased inflationary concerns and prompted traders to scale back expectations for further central bank rate hikes. Brent crude slipped below $95 a barrel after US President Donald Trump downplayed the likelihood of further strikes on Iran, although attacks on vessels near the Strait of Hormuz continued to fuel supply concerns. The move follows a bond rally last week after the Democrats’ sweeping victory in the US midterm elections raised expectations of political gridlock and more limited fiscal spending. Markets currently price in a 66% probability of an ECB rate hike in December, with a further increase by February fully priced in, according to LSEG data. However, French bonds remain vulnerable to domestic political and fiscal uncertainties, as well as questions surrounding the ECB leadership transition following Christine Lagarde’s announcement that she intends to step down early.