Societe Generale projects sustained volatility for French OATs through 2027 as fiscal uncertainty persists and the ECB maintains a cautious stance on market intervention.
French fiscal uncertainty is projected to maintain elevated bond-market volatility well beyond the 2027 elections, according to Societe Generale's Anatoli Annenkov. The lack of immediate ECB intervention suggests that market participants must navigate this period of instability without central bank support unless specific fragmentation risks emerge.
Intervention is currently considered unlikely, though mechanisms like TPI and OMT remain available if market fragmentation threatens monetary policy transmission.
According to Societe Generale, volatility is expected to persist beyond the 2027 French elections.
Societe Generale analyst Anatoli Annenkov warns that French fiscal instability will keep OAT markets volatile through the 2027 elections. The European Central Bank is unlikely to intervene immediately, leaving bond markets exposed to ongoing structural pressures.
The ECB currently views intervention as a conditional measure reserved for instances where market fragmentation threatens the transmission of monetary policy, rather than a tool to mitigate fiscal-driven volatility.