France’s 10-year government bond yield eased to around 3.45%, the lowest level in two weeks, mirroring other eurozone peers. The retreat followed stabilizing bond markets and softer US labor data, which cemented expectations of a Federal Reserve rate cut later this month. However, political uncertainty in France continued to worry investors. Prime Minister François Bayrou is widely expected to lose a crucial confidence vote in parliament on Monday, potentially leading to a government collapse, delays to the budget process, or even snap elections. Bayrou’s last-minute negotiations with opposition leaders have ended in deadlock, making his loss in next week’s confidence vote all but certain. The Socialist Party withdrew any remaining support and renewed its call for a new left-wing coalition to take over. Meanwhile, next week’s ECB meeting will be closely watched, supported by subdued economic activity and inflation holding near the 2% goal.
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