French Bond Selloff Eases as Yield Spread Narrows

2026-10-06 09:35 By Joana Ferreira 1 min. read

France’s 10Y OAT yield fell to 4.75%, retreating from the more than two-decade high above 5% reached late last week.

The spread over German 10-year yields also narrowed as investors reassessed whether the recent surge in France’s risk premium had been too sharp and rapid.

French borrowing costs have risen sharply in recent weeks, with the yield gap over Germany reaching its widest level since the 2011 Eurozone debt crisis amid concerns over France’s fiscal position ahead of next year’s presidential election.

France is set to formally submit its 2027 budget today, while far-right presidential candidate Marine Le Pen is expected to outline plans to cut government spending by €25 billion a year.

Elsewhere, bond-market turmoil has prompted investors to scale back expectations for further ECB rate hikes.

Markets now price an 80% chance of another hike by year-end, while ECB Chief Economist Philip Lane said higher borrowing costs could curb demand and reduce the need for further tightening.



News Stream
French Bond Selloff Eases as Yield Spread Narrows
France’s 10Y OAT yield fell to 4.75%, retreating from the more than two-decade high above 5% reached late last week. The spread over German 10-year yields also narrowed as investors reassessed whether the recent surge in France’s risk premium had been too sharp and rapid. French borrowing costs have risen sharply in recent weeks, with the yield gap over Germany reaching its widest level since the 2011 Eurozone debt crisis amid concerns over France’s fiscal position ahead of next year’s presidential election. France is set to formally submit its 2027 budget today, while far-right presidential candidate Marine Le Pen is expected to outline plans to cut government spending by €25 billion a year. Elsewhere, bond-market turmoil has prompted investors to scale back expectations for further ECB rate hikes. Markets now price an 80% chance of another hike by year-end, while ECB Chief Economist Philip Lane said higher borrowing costs could curb demand and reduce the need for further tightening.
2026-10-06
French Bond Yields at 2002 High
France’s 10-year OAT yield climbed to 4.92%, its highest level since July 2002, as a broader global bond selloff intensified concerns over the country’s fiscal and political outlook. The yield spread over equivalent German Bunds widened to 152 basis points, the largest premium since 2011, reflecting growing investor concern about France’s rising debt burden and limited progress on deficit reduction. The government aims to bring the budget deficit down to 5%, but deteriorating public finances have made that target increasingly difficult to achieve. Political tensions remain elevated, with student protests spreading across France and up to 500 schools facing partial or full closures. More than 5,000 people have been arrested since the protests began, adding to pressure on the government. Prime Minister Sébastien Lecornu pledged measures to address concerns over education and public services. Elsewhere, Spanish PM Sánchez called a snap election after Congress rejected housing measures.
2026-10-05
French 10-Year Bond Yield Briefly Tops 5%
France’s 10-year OAT yield briefly climbed above 5%, its highest level since July 2002, as concerns over the country’s fiscal outlook and political uncertainty intensified. Global government bonds have faced renewed pressure amid elevated energy prices, rising inflation and shifting interest-rate expectations, while French debt has been hit particularly hard by concerns over the government’s ability to rein in spending ahead of the 2027 presidential election. Paris presented its 2027 budget bill on Thursday, proposing unpopular spending cuts aimed at reducing the budget deficit to 5% of GDP next year. The plan has already come under scrutiny from the country’s fiscal watchdog, which warned that its economic assumptions were “optimistic.” Meanwhile, the spread between French and German 10-year yields widened above 150 bps, the highest since late 2011. Agence France Trésor also announced plans to borrow a record €340 billion next year to finance the deficit and refinance maturing debt.
2026-10-02