Overview

• S&P downgraded France by one notch to A+ and set the outlook to stable, citing political instability and projecting debt rising to about 121% of GDP by 2028.
• After surviving two no-confidence votes, the government agreed to suspend Macron’s 2023 pension reform, making fiscal consolidation more difficult.
• Budget talks open with plans for more than €30 billion in tax increases and spending cuts to steer the deficit toward 4.7% of GDP in 2026.
• French 10-year yields hover near 3.36% as analysts warn the lower ratings could trigger forced selling by some investors and keep spreads over Bunds elevated.
• Eurozone contagion remains limited for now, and Moody’s is expected to issue an updated view on France later this week.