Zahn: The Outlook for French Government Debt Remains Dismal

David Zahn, head of European fixed income at Franklin Templeton, stated on Monday that the political instability in France means that the outlook for French government debt continues to be negative.

Zahn referenced the position in the country's government bonds, saying, "We still have a low weighting in France. We believe that France is still unstable, and if a new government is formed, that would naturally be unstable."

He also mentioned that he reduced exposure to common European Union bonds last month due to the high funding needs for next year and uncertainty surrounding the incoming US government and planned tariff increases.

Zahn added that a stagnant economy could mean the European Central Bank might have to aggressively lower interest rates, and noted that he wouldn't be surprised if interest rates fall to 1.25% to 1% next year.