France’s 10-year OAT yield slipped to 3.55% in thin holiday-season trading, holding just below last week’s 14-year highs, as investors digested US President Trump’s comments that a deal to end the war in Ukraine is “closer than ever,” while key issues over the eastern Donbas region remain unresolved.
Market focus also turned to the Netherlands’ occupational pension system, the EU’s largest, which will begin transitioning to a new framework on January 1, allowing the nearly €2 trillion sector to invest in riskier assets.
The 10-year OAT yield is set to finish 2025 around 35 basis points higher, supported by expectations of sustained interest rates amid fiscal uncertainty.
French lawmakers failed to agree on the 2026 budget earlier in December, prompting Prime Minister Sébastien Lecornu to introduce emergency legislation extending spending into January to avoid a government shutdown.
The full budget is expected to pass in early January.