Euro falls as French debt worries and Spanish election call spook markets

The euro weakened as France released a lackluster 2027 budget that fails to curb spending, leaving debt expected to climb to almost 122% of GDP and driving the 10-year French bond yield up to 4.8%, a level not seen since the 2011 eurozone crisis. The fiscal outlook fuels anxiety ahead of next year’s presidential election, where far-right candidate Marine Le Pen, viewed as a fiscal populist, could win. Market pressure intensified after Spanish Prime Minister Pedro Sanchez called for snap elections, following the rejection of a contested housing relief bill by his minority government.

Market strategist Patrick Munnelly noted that France’s credibility was already strained and Spain now adds another layer of risk, while Gabelli Funds’ Justin Bergner warned that the market’s rally may be fragile ahead of earnings season. Despite the euro’s slide, equities rose, with the Nasdaq hitting a new record and shares of SpaceX and Meta gaining, though concerns linger over the narrow base of those gains.