France’s 10-year government bond yield has declined to 3%, marking its lowest point in about a month. This drop mirrors a general decrease in European yields. The fall was triggered by weaker-than-expected PMI data, intensifying worries about Europe’s deteriorating economic outlook.
PMI figures revealed that private sector activity in the Eurozone is tightening again. Notably, the services sector joined manufacturing during the downturn. Germany and France appeared as the weakest performers in the region.
ECB Rate Cut Likely as Eurozone Economic Woes
The disappointing economic data has led investors to anticipate a 50 basis point cut in the European Central Bank’s deposit facility rate next month, up from a previous 15% probability. Political tensions in Germany and France and the escalating conflict between Russia and Ukraine further erode investor confidence.
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In France, instability persists because the 2025 budget is far from being approved. Marine Le Pen’s far-right party threatens to topple the government, adding to the nation’s political uncertainty.
