Euro zone bond yields rise as French borrowing costs hit 24-year high
TLT•Euro zone bond yields rose, with France’s 10-year yield reaching 5% for the first time since July 2002. The French-German 10-year yield spread widened to 150 basis points, the widest among major euro zone sovereign bond markets.
1. French yields climb
France’s 10-year OAT yield rose 8 basis points on Wednesday to 5%, its highest since July 2002, and gained more than 20 basis points this week. The French-German 10-year yield spread stood at 150 basis points, while the average yield increase across major bond markets was 5.7 basis points this week.
2. Political and fiscal concerns
Widespread French protests, political uncertainty and concerns about fragile public finances weighed on bonds. A weakened government is struggling to pass a budget and reduce a large deficit ahead of next year’s contested election. Italian 10-year yields rose 12 basis points this week, while German 10-year yields were little changed.
