France’s 10-year OAT yield slipped toward 3.5%, its lowest level since early December, as investors digested weaker-than-expected inflation data and awaited developments on the country’s budget negotiations. Preliminary Eurozone numbers showed inflation eased to a four-month low of 2% in December, returning to the ECB’s midpoint target, while core inflation fell to 2.3%, slightly below forecasts of 2.4%. In France, the EU-harmonized CPI rose just 0.7% year-on-year, the weakest reading since May and below expectations of 0.8%. Market attention is also focused on France’s record €310 billion debt issuance planned for 2026. The government started the year without an approved budget after lawmakers failed to pass the 2026 finance bill in December. To ensure continued funding, authorities have invoked a special emergency budget law, temporarily rolling over last year’s budget until a new bill is adopted.
