French 10-year bond yield hits 5%, highest since 2002
France's 10-year government bond yield reached 5 per cent on 21 October, a 24-year high, reflecting investor concern over the country's fragile finances and political uncertainty ahead of next year's election.
France's 10-year government bond yield hit the 5 per cent mark on Wednesday, a new 24-year high, the latest sign of growing concern among investors over France's ability to restore its fragile finances.
Government bond yields have risen around the world this year, in light of the surge in energy prices that has prompted central banks to respond with interest-rate rises. Developed market governments are also dealing with ballooning debt piles, and France has seen its borrowing costs rise more than most peers.
France's 10-year bond yield touched 5.002 per cent as of 0914 GMT, and was last up about 8 basis points on the day at just below 5 per cent. Meanwhile, the premium investors demand to hold French bonds over benchmark 10-year German Bunds was at around 137 basis points, nearing levels last seen in 2011.
The gap between French and German yields reflects the extra return investors demand for lending to the former. French bonds are under pressure because a weakened government is trying to get a budget through parliament and bring down a high deficit. Uncertainty ahead of a hotly contested election next year and widespread protests across France are also hurting its markets.