French 10-Year Bond Yield Exceeds 5% for First Time Since 2002
France’s 10-year government bond yield has climbed above 5%, a level not seen since the dot-com financial crisis of 2002. The increase follows weeks of rising yields as lawmakers debate the 2027 budget, which proposes €43 billion ($48bn) in spending cuts. France’s public debt stands at around 120% of GDP, among the highest in the eurozone and well above the EU’s 60% limit.
The spread between France’s 10-year yield and Germany’s benchmark bund has widened to nearly 160 basis points, reflecting investor concerns. The selloff adds pressure on the government ahead of Moody’s sovereign credit rating decision on Friday. Most economists anticipate a downgrade, which would push borrowing costs even higher. Prime Minister Sebastien Lecornu lacks a parliamentary majority to pass the budget, which aims to reduce the deficit to 5% of GDP next year—still above the EU’s 3% ceiling. Weekend protests over public spending turned into the worst street violence in years.
