Institution: The interest rate differential between France and Germany may continue to face increasing pressure in the short term.

Jin Shi Data July 9th news, the analyst at Baida Wealth stated that the outcome of the French election dropped the possibility of implementing large-scale, unsupported expenditure commitments, but there is still a risk of worsening the French budget deficit, which may put pressure on the country’s government bonds. They said, ‘Therefore, we expect that French OAT bonds will continue to pay a risk premium higher than before the election, and the spread between 10-year French OAT bonds and German government bonds may hover between 60 and 80 basis points in the coming months.’ Nevertheless, Baida Wealth maintains its estimate of a 60 basis point difference between the 10-year OAT bond and the yield of German government bonds by the end of the year, and expects the new government to agree to fiscal consolidation, thereby limiting the risk of further downgrading of France’s sovereign debt rating in the short term.