Since the emergence of political uncertainty around July 2024’s snap parliamentary elections, the risk premium on the French bond market – reflected in the 10y spread relative to Germany – has unsurprisingly increased. Most recently, the government’s success in passing a 2025 budget bill has triggered some narrowing of the spread, though it remains above its preelection level. In this paper, authors aim to look beyond the political ‘noise’ to provide a fundamental, macroeconomically grounded evaluation of the French 10-year OAT fair value against a background of a deteriorating fiscal outlook. They estimate a model explaining the gyrations of the French government bond (OAT) 10-year bond yield with a selection of macro-financial variables including the French fiscal deficit […]