French Bonds Resilient Amid Political Talks

French bonds remained stable after talks between caretaker Prime Minister Sebastien Lecornu and political leaders suggested France could avoid snap elections and agree on a budget. However, investors are cautious due to the nation's growing budget deficit. President Macron is set to announce a new prime minister.

French bonds demonstrated resilience on Thursday, maintaining gains from the previous day amid optimism that political leaders could avert a snap election and reach a budget agreement. Recent discussions involved caretaker Prime Minister Sebastien Lecornu, who resigned earlier in the week after failing to address France's budget concerns.

President Emmanuel Macron indicated he would appoint a new prime minister within 48 hours and expressed confidence that most lawmakers opposed early elections. However, economists and investors remain cautious about the country's escalating budget deficit and its potential long-term implications.

The financial market saw France's 10-year bond yield stabilize despite initial fluctuations following Lecornu's resignation. The yield's steadiness came as the European Central Bank kept interest rates unchanged, showing limited concern for the current political scenario in France, with minimal prospects for a rate cut by year-end.

(With inputs from agencies.)