France's long-term borrowing costs surged to 5% – the highest since 2002 – as investors fret over political instability and public finances. A fresh sell‑off on Wednesday lifted French 10‑year bond yields 0.08 points to the 5% threshold, adding to a weekly jump of more than 0.2 points.
The spike follows days of unrest after peaceful protests over living costs and education escalated into rioting and looting. Yields have climbed from 3.2% in late February, making France the hardest hit in a broader G7 bond sell‑off, intensified by the Iran war‑driven inflation and large debt burdens.
Jeff Mueller of Morgan Stanley Investment Management warned that fiscal consolidation ahead of elections is unlikely and the situation could worsen. The spread over German yields neared 1.6 points, a level unseen since the euro crisis. John Stopford of Ninety One said the political outlook is adverse and the spread may widen toward April's presidential election, with limited ECB intervention. Moody's rating decision on Friday could downgrade France from its current Aa3 rating.
Source: Financial Times Markets · Summarized by HeadlinesBriefing