French 10-year bond yield hits 4.989%, highest since 2002
France's risk premium over Germany widened to 150 basis points, a level last touched in 2012.
Published
France's 10-year government bond yield climbed to 4.989% on Friday, the highest level since 2002. The gap over German Bunds widened to 150 basis points, matching a level the spread had already reached on September 30 and last seen in 2012.
The move follows a steady climb in the premium through the week. On Wednesday the spread stood at 124 basis points, up 5 basis points on the day, while Italy's own risk premium over Germany topped 100 basis points for the first time since March. French inflation data for September, released earlier in the month, showed prices accelerating to 3.4%, above forecasts.
ECB President Christine Lagarde has described France's debt load, at 120% of GDP, as a serious problem with no clear path lower, in comments to La Croix. French minister Lescure has said every measure in the budget remains open for negotiation.
Friday's yield marks a fresh break above the levels reached in September and shows the spread widening and Lagarde's warning now showing up directly in the cash yield, not just in the premium. Through this cycle, French fiscal stress has moved French yields, spreads and equities without a consistent spillover into US Treasurys or broader risk appetite, and nothing in Friday's move changes that pattern. Gold has already picked up some haven demand tied to France's fiscal outlook, alongside moves in Treasury yields driven by the Federal Reserve; a further bid for gold is the more likely channel if the French move continues.