The French government should submit a draft budget to the National Assembly in weeks.
A battle looms as the government seeks to keep the deficit under control ahead of 2027's presidential election that polls suggest could favour the far right.
"There is risk of OAT (French bond) yields moving up," said Zurich Insurance Group Chief Economist Guy Miller. "But we don't think it's to the extent that really undermines the construct of euro debt."
Germany's bonds could also struggle as Chancellor Friedrich Merz faces a series of state elections. His popularity is low after several political blunders, and the far-right AfD could outperform Merz's party in some votes.
New British Prime Minister Andy Burnham's policies haven't worried markets much, though his efforts to boost growth given constrained finances could change that.
The October budget and the Labour Party Conference in September are tests for Burnham and new finance minister John Healey.
Britain's 10-year borrowing costs are elevated but have edged down from 18-year peaks hit in May GB10YT=RR.
The scars of the 2022 mini-budget crisis may restrain the new government. Burnham says he will stick to UK fiscal rules.
"There is a risk they try and push the envelope, and I think that would be a mistake," said Berenberg senior UK economist Andrew Wishart.
Campaigning for November's U.S. midterm elections traditionally heats up in September, and could affect policy.
Consumers are eyeing the gasoline price, pushed above $4 a gallon on average by the Iran war, from below $3 in January.
President Donald Trump told Americans this month it is worth higher prices to defeat Iran, but some analysts suspect he wants the price to fall before Americans vote.
Jefferies chief European economist Mohit Kumar also links the election to Treasury Secretary Scott Bessent's efforts to lower borrowing costs.
The "Trump administration cannot afford higher long-term rates going into the midterms as mortgages are tied to the long end of the (Treasury) curve," Kumar said.
SPY•
