{"id":"1793009132479-money-segment","slug":"france-dodges-downgrade-as-euro-slides","title":"France dodges downgrade as euro slides","summary":"Moody's left France's sovereign credit rating at Aa3 with a negative outlook on October 23, avoiding a downgrade despite market expectations. France's 10-year borrowing rate has surged above 5% for the first time since 2002, and its spread over German bunds hit a 15-year high. The euro has been the worst-performing G10 currency in October.\n\nPolitical fragmentation, social unrest and difficulty passing a deficit-reducing 2027 budget are weighing on French debt. France's deficit is about 5.5% of GDP, far above the EU's 3% limit. Rising European natural gas prices and softer PMI data are also reinforcing stagflation risks. Moody's kept the rating only on the assumption that a deficit-reducing 2027 budget is adopted and funding costs/social tensions moderate.\n\nING's Chris Turner has said the euro remains on “OAT-watch” and the case for a EUR/USD recovery is weak; Moody's did leave France at Aa3 with a negative outlook. MUFG separately said the Moody's reprieve “fails to support EUR.”","publishedAt":"2026-10-26T10:05:32.479Z","channel":{"id":"money","name":"Oncast Money","language":"en"},"show":"Morning Brief","verification":{"status":"verified","leadVerdict":"TRUE","notes":"TRUE: ING's Chris Turner has said the euro remains on “OAT-watch” and the case for a EUR/USD recovery is weak; Moody's did leave France at Aa3 with a negative outlook. MUFG separately said the Moody's reprieve “fails to support EUR.”\nSource: [fxstreet.com](https://www.fxstreet.com/news/euro-french-fiscal-risks-limit-recovery-against-us-dollar-ing-202610200717) NAMES: ING = Dutch banking group; Moody (https://x.com/DeItaone/status/2114647436182310983)","claims":[{"verdict":"TRUE","summary":"ING's Chris Turner has said the euro remains on “OAT-watch” and the case for a EUR/USD recovery is weak; Moody's did leave France at Aa3 with a negative outlook. MUFG separately said the Moody's reprieve “fails to support EUR.”","sourceName":"[fxstreet.com](https://www.fxstreet.com/news/euro-french-fiscal-risks-limit-recovery-against-us-dollar-ing-202610200717) NAMES: ING = Dutch banking group; Moody","sourceUrl":"https://x.com/DeItaone/status/2114647436182310983","claim":"ING WARNS EURO COULD FALL FURTHER ON FRENCH DEBT CONCERNS ING says the euro remains vulnerable despite Moody's maintaining France's Aa3 credit rating. With little progress expected on France's budget and energy prices elevated, pressure on the currency could persist. 🔸","author":"*Walter Bloomberg (@DeItaone)"}]},"sources":[{"url":"https://x.com/DeItaone/status/2114647436182310983","name":"[fxstreet.com](https://www.fxstreet.com/news/euro-french-fiscal-risks-limit-recovery-against-us-dollar-ing-202610200717) NAMES: ING = Dutch banking group; Moody","kind":"x","verdict":"TRUE","author":"*Walter Bloomberg (@DeItaone)"}],"url":"https://oncast.fm/story/1793009132479-money-segment-france-dodges-downgrade-as-euro-slides","listenUrl":"https://oncast.fm/c/money","attribution":{"publisher":"Oncast","site":"https://oncast.fm","url":"https://oncast.fm/story/1793009132479-money-segment-france-dodges-downgrade-as-euro-slides","cite":"Cite https://oncast.fm/story/1793009132479-money-segment-france-dodges-downgrade-as-euro-slides and the original source links. Fact-check by Oncast (oncast.fm)."},"hostsSaid":[{"host":"Bill","text":"Good morning, it's Monday. Moody's kept France's credit rating unchanged overnight, but the euro is still sliding."},{"host":"Adam","text":"Walter Bloomberg posted the ING note on X. They kept France at Aa3 with a negative outlook. That's not exactly a vote of confidence."},{"host":"Bill","text":"Less \"all clear\", more \"we'll check the budget later.\" France's ten-year borrowing cost just passed five percent for the first time since 2002."},{"host":"Adam","text":"And the spread over German bunds hit a fifteen-year high. The market is saying France is a lot riskier than Germany right now."},{"host":"Bill","text":"Because the budget is a mess. The deficit is around five and a half percent of GDP, almost double the EU limit."},{"host":"Adam","text":"Moody's basically said they'll believe a deficit-cutting budget when they see one. Right now, they don't."},{"host":"Bill","text":"And they're also watching politics. Fragmentation, social unrest, no passed budget. That's the backdrop."},{"host":"Adam","text":"Moody's kept the rating only because they assume a deficit-reducing 2027 budget is adopted and social tensions moderate."},{"host":"Bill","text":"If that assumption fails, the next review gets ugly."},{"host":"Adam","text":"ING's Chris Turner says the euro is on \"OAT-watch.\" That means traders are glued to French government bonds for the next shoe to drop."},{"host":"Bill","text":"Stagflation, anyone? Energy prices are up, growth data is soft. ING says there's no case for a sustained euro recovery."},{"host":"Adam","text":"MUFG says the Moody's reprieve offers limited support. The rating didn't improve anything, just didn't make it worse."},{"host":"Bill","text":"RBC BlueBay warns if Moody's, S&P, and Fitch all cut later, rating-constrained investors might be forced to sell. That's the real risk."},{"host":"Adam","text":"Still, no downgrade today. That's a small win, but a win."},{"host":"Bill","text":"So France dodges one bullet, but the euro's still taking fire. Fine, next: the Fed."},{"host":"Adam","text":"The Fed meets this week, and the Wall Street Journal says the base case is a hold."},{"host":"Bill","text":"There's a Goldman note going around saying hold now, hike in December. That matches the cautious mood."},{"host":"Adam","text":"Prediction markets put an October hold at over ninety percent. A hike is basically a six percent long shot."},{"host":"Bill","text":"Kalshi traders are pricing that hold at ninety-three percent, according to one post. But those odds can move fast."},{"host":"Adam","text":"But Bank of America reportedly still wants an October hike. That's a minority view, but oil and inflation give it some oxygen."},{"host":"Bill","text":"Bank of America's call is based on sticky inflation, they argue. But if they're wrong, it's a costly mistake."},{"host":"Adam","text":"The labor market is weak. You can't hike into that. Kevin Warsh is trapped between hot prices and soft jobs."},{"host":"Bill","text":"Exactly why most expect no move this week. Let the data catch up. We'll see Wednesday."},{"host":"Adam","text":"The Fed doesn't want to be the story this week. A hold lets them stay out of the headlines."},{"host":"Bill","text":"If they do hold, the debate just shifts to December. That's when the hard call comes."},{"host":"Adam","text":"And the ECB meets too. Both central banks likely on hold, then maybe moving later."},{"host":"Bill","text":"Different world entirely: there's a post claiming Elon Musk is warning about AI data-center debt."},{"host":"Adam","text":"Walter Bloomberg's account also has this. The claim: debt markets have shut off financing for companies without substantial revenue outside AI data centers."},{"host":"Bill","text":"Neocloud is the term for companies renting out AI compute. The argument is that a lot of them were built on cheap debt, not real earnings."},{"host":"Adam","text":"If true, that's big. He says two hundred plus of those companies could fail or consolidate."},{"host":"Bill","text":"We can't confirm that number, but the logic's real: too many players rented GPUs, borrowed heavily, and now rates are high."},{"host":"Adam","text":"The flip side: big cloud providers with actual revenue might scoop up the wreckage cheap."},{"host":"Bill","text":"That's the consolidation trade. Watch that space."},{"host":"Adam","text":"It's not just Musk. QCP Capital reportedly says AI infrastructure credit stress is spilling into crypto and equities."},{"host":"Bill","text":"That report isn't confirmed either, but it fits the same story: easy money is leaving the room."},{"host":"Adam","text":"If that widens, it adds pressure on risk assets."},{"host":"Bill","text":"The AI buildout isn't going away, but the financing is getting real. That separates the real businesses from the power-point decks."},{"host":"Adam","text":"So Monday's shape: France holds, Fed on hold expected, AI debt warning, and a cautious tape."},{"host":"Bill","text":"That's the morning brief. We'll be watching the Fed, the euro, and the AI credit squeeze all week."}]}