French-German 10-year bond spread hits decade-high after budget disclosures

Sébastien Lecornu discussed France’s upcoming deficits in an interview, prompting close monitoring of bond markets. Initial trading saw French yields rise modestly without a sharp jump. However, later in the day the differential between French and German 10-year yields expanded to one percentage point, matching the peak observed during the 2012 sovereign debt turmoil.

This spread, a key barometer of investor confidence, suggests heightened doubt about France’s ability to service its debt. The Ministry of the Economy has already revised its deficit outlook for 2026, adding to market concerns. Analysts view the widening gap as a warning sign for French fiscal stability.