France's 10-year bond yield jumps, widening gap with German benchmark
The yield on France's 10-year OAT rose to 4.94%, pushing the spread over German Bunds to a multi-year high.
France's 10-year OAT yield reached 4.94% on Tuesday, expanding the gap with the German Bund to over 150 basis points, the widest margin in recent years. The surge follows a period of bond sell-offs driven by concerns over the government's ability to curb spending and manage a debt load that now exceeds 120% of GDP. Investors are also awaiting Moody's rating verdict, which could trigger additional cost pressures if a downgrade occurs.
Prime Minister Sébastien Lecornu is seeking parliamentary approval for a 2027 budget that includes €43 billion in cuts, yet he does not command a majority. Even if passed, the plan would leave the deficit at about 5% of GDP, well above the EU's 3% ceiling.
Why it matters
Higher French borrowing costs signal fiscal stress and could raise financing expenses across the eurozone.
How this story developed
- Sep 4 Rising French borrowing costs spark fears of wider Eurozone debt risk
- Oct 8 The 10‑year yield climbed to just under 5% and the spread to German bonds topped 150 basis points.
- Oct 9 Bond market sell‑off intensifies as yields spike.
- Oct 12 Rising borrowing costs hit France as a global debt storm intensifies.
- Oct 14 In a lengthy interview, Marine Le Pen said she expects a showdown with the European Commission over lowering France's EU budget contribution, plans to halt French funding for Ukraine, and confirms Jordan Bardella as her chosen prime minister.
- Oct 18 Zelensky highlighted that cooperation with Ukraine provides real‑world testing for French defence products.
- Oct 20 The France‑Germany 10‑year bond spread moved past the symbolic 1.5‑point barrier.
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