06.03.202609:12:47UTC+00France 10-Year Yield Hits Six-Week High on Inflation Concerns

France’s 10-year OAT yield rose to 3.49%, its highest level since January 23, and is heading for a 26-basis-point weekly gain—the sharpest increase since March of last year—as investors reassess inflation risks stemming from the escalating conflict in the Middle East. Mounting regional tensions have intensified fears of disruptions to global crude oil supplies, pushing energy prices higher and raising the prospect of persistently elevated inflation across Europe. This, in turn, has reinforced expectations that the European Central Bank will maintain a tighter monetary policy stance.

On Thursday, several ECB policymakers warned that a prolonged war involving Iran and additional countries could further fuel eurozone inflation while simultaneously undermining economic growth. Money markets now imply a 60% probability of an ECB rate hike in December and a 90% chance of another increase by June 2027.