French 10-year yield falls below 5% as country spared ratings downgrade, oil prices dip
TLT•France’s 10-year government bond yield fell 6 basis points to 4.963% after Moody’s maintained the country’s Aa3 rating. Oil prices also dipped, while markets looked ahead to the European Central Bank’s Thursday rate decision.
1. French yields ease
A selloff in French government bonds paused after Moody’s kept France’s sovereign rating at Aa3, sparing the country a downgrade. The 10-year yield fell 6 basis points to 4.963%, down from 5.1415% on Thursday, its highest level since June 2002. The gap between French and German 10-year yields narrowed 8 basis points to 158 basis points.
2. ECB and oil in focus
Oil prices declined from a six-month high as hopes grew for de-escalation in the Middle East. The European Central Bank is likely to leave its deposit rate unchanged on Thursday, with attention on President Christine Lagarde’s outlook and the central bank’s monitoring of French and other indebted euro zone countries’ bond selloffs. Germany’s 10-year yield rose 2 basis points to 3.364%.
