French Bond Yields at 2002 High as Fiscal Concerns Deepen

2026-10-01 15:12 By Joana Ferreira 1 min. read

France’s 10-year OAT yield surged above 4.95%, reaching its highest level since July 2002, after posting its biggest quarterly increase in nearly four decades.

The move came as the minority government unveiled its long-awaited plan to rein in the budget deficit, targeting a reduction to 5% of GDP next year from 5.4% this year.

The plan has already drawn scrutiny from the country’s fiscal watchdog, which warned that the budget’s economic assumptions are “optimistic.” French borrowing costs have also risen sharply amid a global bond selloff, with the 10-year yield spread over Germany widening to 150 bps, the highest since 2012, reflecting growing concerns over debt sustainability.

With the debt burden expected to exceed 120% of GDP next year and political uncertainty ahead of April’s elections, interest costs are set to climb.

Meanwhile, Agence France Trésor plans a record €340 billion of borrowing to finance the deficit and refinance maturing debt.



News Stream
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