Sumitomo Life to remain cautious on JGB yields, keep investment pace unchanged from H1

France’s government bond selloff paused on Monday after Moody’s maintained the country’s Aa3 credit rating, easing one source of pressure in the market. Attention is now shifting toward the European Central Bank’s policy decision due on Thursday.

Rating decision offers temporary relief

Moody’s decision to leave France’s rating unchanged came as weekend protests in the country were mostly peaceful. The combination helped reduce tensions around the French bond market, although the recent rise in yields remains under scrutiny.

The yield on France’s 10-year OAT declined on Monday after reaching its highest level since June 2002. The move marks a pause in the recent selloff, but the market remains focused on how elevated borrowing costs could affect conditions across the region.

ECB policy decision in focus

The European Central Bank’s upcoming decision is the next major event for investors tracking the rise in government bond yields. Analysts expect the ECB to monitor the increase closely and assess its impact as it considers its policy position.

The decision could provide further direction for European bond markets after the sharp move in French yields. For now, the unchanged credit rating and calmer protests have helped limit immediate tension, while the ECB’s assessment remains the central market focus.

What to watch next

• Moody’s has maintained France’s Aa3 rating.
• France’s 10-year OAT yield fell after reaching its highest level since June 2002.
• Weekend protests in France were mostly peaceful.
• The ECB is scheduled to announce its policy decision on Thursday.
• Analysts expect the ECB to evaluate the impact of rising yields.