French bonds, stocks and the euro fell after widespread protests over high prices and declining public services heightened concerns about the government’s ability to reduce the deficit. France’s 10-year yield rose 8 basis points to 4.86%, while the CAC 40 fell 1.2%.
France’s 10-year yield rose 8 basis points to 4.86% on Monday, while Germany’s 10-year yield was flat at 3.41%. The gap between the yields widened to 145 basis points, its highest in two weeks. French bonds and stocks underperformed other European markets after protests over high prices and declining public services led to thousands of arrests and damage to shops.
The CAC 40 fell 1.2%, compared with a 0.6% decline in broad European stocks. BNP Paribas and Societe Generale each lost more than 2%. The euro fell 0.2% to 0.3% against the dollar, pound and yen.
The article cited France’s fiscal challenges and the approaching 2027 presidential election as sources of political risk. Moody’s was due to review France’s credit rating on Friday; analysts at Commerzbank said spread headwinds from a possible downgrade were likely to remain limited. Traders were also watching for any spillover to other heavily indebted euro zone countries, including Italy.
