French Bond Yields Hit 2002 High Ahead of Budget

2026-10-01 07:23 By Joana Ferreira 1 min. read

French 10Y OAT yield surged to 4.95%, touching its highest level since July 2002, after recording their biggest quarterly increase in nearly four decades.

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 bps on Wednesday, near levels last seen during the euro-area debt crisis.

A debt burden expected to exceed 120% of GDP next year and political uncertainty ahead of April's elections are also driving up interest costs, with the government forecasting a €91 billion bill in 2027.

Agence France Trésor also plans a record €340 billion of borrowing in 2027 to fund the deficit and refinance maturing debt.



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