Bond Markets Remain Calm Amid French Government Chaos

The bond markets across the eurozone remained stable on Tuesday despite the expected downfall of the French government. Investors are closely monitoring President Emmanuel Macron's potential decisions, including the possibility of snap elections, following the loss of confidence in Prime Minister Francois Bayrou.

A significant focus is on the spread between French and Italian bonds, with France nearing a point where its bonds may yield more than Italy's. Macron's office has announced that a new prime minister will be appointed within days, calming expectations of looming political upheaval.

Analysts have highlighted that markets were prepared for this governmental transition, which helped maintain composure among investors. The yield gap between French and German government bonds remains a critical measure of investor confidence in holding French debt, while strategists note subtle shifts in benchmark bond data.

(With inputs from agencies.)