French bond yields reach highest since 2002 ahead of budget
TLT•France’s 10-year government bond yield rose to 4.96%, its highest level since July 2002, ahead of the government’s 2027 budget. The spread over German 10-year bonds reached 132.86 basis points, its widest since May 2012.
1. French yields climb
French 10-year government bond yields rose to 4.96% on Thursday, close to 5% and the highest level since July 2002, as the government prepared to unveil its 2027 budget. Investors have sold French bonds in recent weeks amid concerns about rising interest rates, high debt and political risk ahead of the 2027 presidential election.
2. Debt and budget concerns
The spread between French and German 10-year yields reached 132.86 basis points, its widest since May 2012. France’s public debt management office said the country would sell a record amount of bonds next year. A rate strategist at Commerzbank said French media reported the government was pencilling in around €10 billion more in interest expenses for 2027 than a year earlier.
3. Broader bond selloff
Euro zone government bond yields rose after their biggest quarterly increase since 2022, as an energy shock supported expectations of at least three European Central Bank rate hikes by late 2027. Germany’s 10-year yield was 3.62%, while Italian bond yields also rose.
