French 10-year yield set for biggest quarterly jump since 1987
TLT•France’s 10-year bond yield rose 113 basis points in the third quarter, its biggest quarterly jump since 1987, and was up 61 basis points in September. The government plans to sell a record €340 billion of bonds next year, with interest expenditure forecasts €5 billion higher in 2026 and €7 billion higher in 2027 than a year ago.
1. French yields climb
France’s 10-year OAT yield was 4.78%, down 3 basis points on the day and just below Tuesday’s 18-year high. It rose 61 basis points in September, its biggest monthly increase since late 2022, and 113 basis points since the start of July. The spread between French and German 10-year borrowing costs stood at 120 basis points, its highest since 2012.
2. Borrowing costs and inflation
The French government said it would sell a record €340 billion of bonds next year. Interest expenditure is now expected to be €5 billion higher in 2026 and €7 billion higher in 2027 than forecasts made a year ago. Meanwhile, French harmonised inflation rose to 3.4% in September from 2.6% in August; German and Italian inflation also increased.
