Calm After the Storm: French Bonds Steady Amid Volatile Markets

French government bonds remained steady as markets recovered from a major sell-off that increased the risk premium against German bonds. Christine Lagarde warned against a global trade war, and there is rising political tension in France with public dissent against Prime Minister Michel Barnier's government.

French government bonds demonstrated stability on Thursday as markets regained composure following a notable sell-off. This downturn had previously elevated the risk premium of French bonds over German equivalents to levels reminiscent of the 2012 debt crisis.

The subdued trading day, influenced by the U.S. Thanksgiving holiday, kept bond yields nearly unchanged. ECB President Christine Lagarde emphasized that a global trade war benefits no one, as European markets braced for potential U.S. tariffs under President-elect Donald Trump.

In domestic politics, Prime Minister Michel Barnier faces considerable opposition against his budget, with more than 50% of the French public desiring a government change. Meanwhile, French bond yields approached parity with Greek bonds, a notable economic development.

(With inputs from agencies.)