Moody’s maintained France’s long-term foreign-currency sovereign credit rating at Aa3, defying expectations of a downgrade, but kept the outlook negative. The agency cited slower growth and a higher deficit, which have pushed the country’s debt burden above previous projections, as well as rising bond yields and social protests that could hinder fiscal consolidation. French yields have risen more than those of any other developed economy this month, reaching a 24-year high. France’s deficit is projected to reach 5.4% of GDP this year, as political gridlock, sluggish growth and rising interest costs undermine efforts to rein in public debt. Moody’s expects a deficit-reducing 2027 budget to be adopted despite the challenging political and social environment. The rating remains one notch above those of S&P and Fitch, which downgraded France during a budget dispute in autumn 2025. Last month, Scope Ratings also downgraded France, while Morningstar DBRS revised its outlook to negative.

France Avoids Moody’s Downgrade

The Mexican peso strengthened to around 18.64 per US dollar in October, reaching its highest level in nearly a year. The currency appreciated following strong economic activity data, with the Global Indicator of Economic Activity rising 3.5% year over year through August, its strongest performance since September 2023. The exchange rate was also supported by expectations that Mexico and the US could reach a trade agreement, following comments by President Claudia Sheinbaum and US President Donald Trump indicating that the two countries were close to a deal. Meanwhile, annual mid-month inflation rose to 3.62% in October from 3.42% in September, slightly above forecasts of 3.60%. Persistent inflationary pressures could encourage a more hawkish stance by Banxico, while markets largely expect the US Federal Reserve to hold rates at its next meeting. A wider US-Mexico interest rate differential would strengthen the peso’s yield advantage and potentially encourage carry-trade inflows.

Mexican Peso Hits Near One-Year High

Canada’s 10-year government bond yield edged higher to around 3.85% in October as expectations for Bank of Canada policy shifted toward tighter monetary conditions. Markets anticipate a more hawkish tone at the BoC’s next policy decision, scheduled for October 28. Governor Tiff Macklem recently said the central bank expects to significantly raise its quarterly inflation forecast this month, following hawkish remarks last week about energy-driven price pressures. Rising oil prices have added to upward pressure on energy costs amid the escalation of the conflict in the Middle East. Meanwhile, Canadian retail sales are expected to have increased 0.7% month over month in September, extending a 1.2% gain in August, according to preliminary estimates. Stronger retail activity could add to inflation concerns and reinforce expectations for a tighter monetary policy stance.

Canada’s 10-Year Yield Edges Higher on BoC Rate Hike Bets

Paraguay’s Producer Price Index fell 0.8% year-on-year in September 2026, marking its eighth consecutive annual decrease. The decline was mainly driven by negative contributions from domestic agriculture and horticultural products and live animals and animal products, as well as imported metallic products, machinery and equipment, and food, beverages and tobacco, textiles, and leather products. Meanwhile, domestic non-metallic transportable goods and other manufactured products, along with imported non-metallic transportable goods, made positive contributions, helping to mitigate the overall decline. By product grouping, both domestic and imported products contributed negatively to the annual result.

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France Avoids Moody’s Downgrade

Mexican Peso Hits Near One-Year High

Canada’s 10-Year Yield Edges Higher on BoC Rate Hike Bets

Paraguay Producer Prices Fall for Eighth Consecutive Month