French Borrowing Costs Surge
France’s 10-year OAT yield rebounded to 4.95%, extending its recent surge and holding near multi-year highs as political turmoil and concerns over fiscal consolidation weighed on market sentiment. Investors are also awaiting Moody’s long-anticipated credit rating review on Friday, with the prospect of a downgrade adding pressure to French government bonds amid a broader global selloff fueled by renewed inflation concerns and expectations of higher interest rates. Authorities imposed curfews in several cities in an effort to contain nationwide anti-government protests. However, further demonstrations planned for Saturday, alongside ongoing negotiations over the 2027 budget, have heightened concerns about the government’s ability to implement austerity measures ahead of next year’s elections. The 10-year OAT-Bund yield spread widened beyond 150 basis points, reaching its highest level since the eurozone sovereign debt crisis.
France’s 10-year OAT yield rebounded to 4.95%, extending its recent surge and holding near multi-year highs as political turmoil and concerns over fiscal consolidation weighed on market sentiment. Investors are also awaiting Moody’s long-anticipated credit rating review on Friday, with the prospect of a downgrade adding pressure to French government bonds amid a broader global selloff fueled by renewed inflation concerns and expectations of higher interest rates. Authorities imposed curfews in several cities in an effort to contain nationwide anti-government protests.
However, further demonstrations planned for Saturday, alongside ongoing negotiations over the 2027 budget, have heightened concerns about the government’s ability to implement austerity measures ahead of next year’s elections. The 10-year OAT-Bund yield spread widened beyond 150 basis points, reaching its highest level since the eurozone sovereign debt crisis.