French Bond Yields Hit New High Ahead of Budget Plan

France’s 10-year OAT yield surged to 4.9% on Thursday, its highest level since June 2002, ahead of the government’s budget announcement. The government is set to unveil a €54 billion fiscal consolidation plan aimed at reducing the budget deficit to 5% of GDP in 2027 from 5.4% this year. The measures are expected to target pensions, public-sector wages and other politically sensitive spending, while extending a one-off tax on large companies. France’s borrowing costs have risen sharply amid a global bond selloff, with the 10-year yield spread over Germany widening to 127 basis points on Wednesday, near levels last seen during the euro-area debt crisis. Rising yields and a debt burden expected to exceed 120% of GDP next year are also driving up interest costs, with the government forecasting a €91 billion bill in 2027.