France’s 10-year OAT yield fell to 3.7% as investor optimism grew over potential US-Iran peace talks, with Pakistan offering to host further negotiations. The latest Islamabad discussions collapsed, leading to a US naval blockade on the Strait of Hormuz. While oil prices dropped below $100 on hopes of a deal and Strait reopening, temporarily easing inflation fears, the OAT yield remains near multi-year highs. Markets expect a more hawkish European Central Bank, pricing in at least two rate hikes by end-2026 amid lingering inflation concerns.
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