I do not see 10 Yr French gov. bond yield break the resistance of this bearish canal. Paris CBD offices trade at c.2.7% yield which implies an already compressed spread. Further compression would likely cause a RE crash and a recession. This is true for RE and probably for other sectors too. Declining yields could result from a variety of factors though i do not beleive in the rosy ones
The yield broke out of the bearish canal for a short amount of time before closing back into it. It really shows how higher yields lead to rising economic uncertainty, which in turn, creates recessionary fears, accelerates the flight to safety i.e. to government bonds thereby reducing yields. A self correcting mechanism based on thresholds that could be identified using RE yields and historical premia. In France, the spread between 10Y OAT and prime office yields in Paris never went below 1%. Here again, the 1% acted as strong resistance. I am not saying that OAT is the only variable here but RE yields move on a much wider timescale. CRE markets will correct but it will take time, probably years. In the short term, I'd be surprised to see gov bond yields go much higher from their current levels. The economy simply couldn't handle it. All in all, I think the small deviation from my forecasts is trivial and therefore reiterate them. Long bonds.