French 10-year OAT yields fell below 4.5%, retreating from last week’s 18-year highs as oil prices continued to decline amid tentative signs of easing geopolitical tensions and stronger regional supply. The move came alongside worsening concerns about France’s public finances. Scope Ratings downgraded the country to A+ from AA-, citing rising debt, persistent deficits and limited progress on structural reforms. Morningstar DBRS also shifted its outlook on France’s AA rating to negative. France’s budget deficit is now expected to widen to 5.4% of GDP this year, compared with 5.1% in 2025. The 10-year OAT-Bund spread (the gap between French and German borrowing costs) briefly exceeded 100 basis points for the first time in 14 years. Political uncertainty ahead of next year’s presidential election is complicating the government’s efforts to win backing for planned fiscal consolidation.