While yields retreated slightly, they remain anchored at elevated levels, buoyed by robust U.S. economic expansion and resilient eurozone demand. The 10-year German Bund yield slipped 2.6 basis points to 3.463%, while the 10-year French OAT yield fell 1.5 basis points to 4.847%. Beyond American data, fiscal instability in France continues to weigh on investor sentiment. The French government faces a difficult path to secure parliamentary approval for a budget plan targeting a 5% deficit-to-GDP ratio by 2027, a process complicated by a fractured legislature.

Joost van Leenders, senior investment strategist at Van Lanschot Kempen, noted that high yields align with current economic conditions, though he flagged French budget volatility as a specific source of ongoing market uncertainty. As the French parliament begins debating revenue measures this week, analysts at Danske Bank expect this domestic friction to remain a primary focal point. Meanwhile, U.S. inflation forecasts suggest a rise in headline figures to 3.7%, intensifying the scrutiny on the Federal Reserve’s upcoming decision on October 28. Although markets currently assign only an 18% probability to a rate hike this month, long-term investors remain cautious, with many—including strategists at Morgan Stanley—opting to wait for both the Fed’s policy shift and the conclusion of the U.S. midterm elections before committing to new positions in duration.