(Bloomberg) -- French bonds capped a volatile week with a rally, erasing their underperformance versus German peers, as money markets priced in faster interest rate cuts from the European Central Bank. 

The yield premium on 10-year notes — a popular risk gauge in markets — narrowed to 81 basis points in the final minutes of trading on Friday, bringing the gap over equivalent German notes back to levels seen at the start of the week.

Investors also won some respite after Prime Minister Michel Barnier on Thursday made concessions over his budget for 2025 — a bid to avert a no-confidence motion in parliament. Marine Le Pen has given him a Monday deadline to agree to further amendments.

French government securities were laggards for days as investors worried political parties that object to Barnier’s plans would seek to topple his administration, with the spread at one point rising to 90 basis points. Still, it remains elevated — nearly double where it was trading before snap elections in June. 

France’s Le Pen Boosts Budget Asks Ahead of Monday Deadline

JPMorgan Chase & Co. earlier brought forward its call for a half-point interest-rate cut to December, citing the bloc’s slowing economic activity. The report encouraged money market traders to bet on a 50-basis-point cut next month, boosting the chance of such outcome to 20% from 10%. German and Italian 10-year yields also fell. 

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