The French government bond risk premium over safe-haven Bunds tightened further on Wednesday, as fading prospects of snap elections eased political risk, even though analysts cautioned the threat may only be postponed. By shelving pension reform until after 2027 and appeasing leftist lawmakers who fiercely opposed the 2023 overhaul, French Prime Minister Sebastien Lecornu has managed to stave off a sharp escalation in France's prolonged political crisis. French 10-year yields fell another 3 basis points in early trading to 3.37%, the lowest since August 15, bringing the decline so far this week to 10 bps, heading for the largest weekly decline since May.

"This averts the event risk (snap elections) for now and might result in further OAT tightening towards 75 bps," said Aman Bansal, senio

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