French government bond futures weaken as political turmoil raises credit concerns

On Monday, French government bond futures fluctuated lower, with the December contract for 10-year government bonds dropping about 0.1% in early trading. This decline was triggered by Fitch's downgrade of France's credit rating from AA- to A+, citing reasons such as rising government debt, increasing political polarization, and uncertainty in fiscal prospects. Stephen Spratt, a rates strategist at Société Générale for developed markets in the Asia-Pacific region, stated: "This may exacerbate the pressure on OATs relative to other European government bonds. Italian 10-year government bonds have outperformed OATs on certain metrics, and further deterioration in market sentiment in France in the short term may lead to a continued increase in the relative value of Italian government bonds."