French 10‑year government bond yields rose to approximately 4.85% on Monday, the steepest increase among G7 sovereigns, widening the yield gap with German 10‑year bonds to about 145 basis points.
The higher French yield now exceeds Italy’s 10‑year rate of roughly 4.52%, marking the first time France’s borrowing cost has overtaken its southern European counterpart, a development linked to heightened fiscal concerns and recent civil unrest.
France’s fiscal outlook remains strained, with the deficit projected at 5.4% of GDP for the year—well above the EU’s 3% ceiling—and Prime Minister Sébastien Lecornu seeking €54 billion in savings for the 2027 budget, factors that have pressured sovereign pricing.
The market reaction extended to equities, as the CAC 40 slipped back below the 7,890 support level and approached the next support zone near 7,510, while major French banks—including BNP Paribas, Crédit Agricole, and Société Générale—each fell more than 2%.
Mortgage markets also felt the pressure; the average 20‑year French mortgage rate rose to 3.66% in October from 3.17% earlier in the year, reflecting broader financing cost increases for households.
This story was compiled by the Tradexus News Desk with the help of AI.
