French Finance Minister Roland Lescure has said the bond market is working properly and that France does not need a "hand of god" intervention, even as the premium investors demand to hold its debt has soared in recent weeks.
Speaking at a fireside chat at the London School of Economics on Thursday, Lescure said: "We're not in a dysfunctioning market." He described the rise in borrowing costs as part of a broader global repricing of debt expectations, inflation expectations and monetary policy expectations. "This is a global repricing of debt expectations, inflation expectations, monetary policy expectations that's taking place, and we have to take it on board as policymakers to do the right thing," he said.
Lescure added that central banks must also reassure markets that they will do their jobs, signaling that the response to the selloff should rest with policymakers rather than with direct intervention in the bond market.
The comments come as the premium on French 10-year bonds over safer German peers has surged to levels not seen since the euro-area debt crisis. Investors have grown more cautious amid concerns about public finances and political uncertainty in France, against the backdrop of a global selloff in government debt.
The spread widening has drawn attention across European markets, where the cost of borrowing for France has moved sharply relative to Germany, the benchmark for euro-area safe-haven debt. Lescure's remarks suggest the government sees the move as a reflection of wider macroeconomic forces and fiscal concerns rather than a malfunction in trading or liquidity.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing