French Bond Yields Dip as Investors Await Budget Vote

French government bond yields fell slightly on Tuesday after recording their largest daily increase in about a month, as investors remained cautious ahead of a vote on the budget bill later in the day. The yield on French OATs dropped two basis points to 4.90 percent. The spread between French and German bond yields narrowed by one basis point to 146 basis points, after reaching 158.67 basis points in early October, its highest level since November 2011. French bonds had fallen Monday following widespread protests highlighting government difficulties in reducing the large deficit, though a curfew in specific areas helped maintain calm overnight. German 10-year bund yields, the eurozone benchmark, fell one basis point to 3.44 percent, while two-year yields dropped 1.5 basis points to 3.08 percent. Analysts noted it would be difficult to meaningfully reduce market expectations for further European Central Bank rate hikes amid persistent energy price pressures.