Investors dub France the ‘new sick man of Europe’ as 10-year yield hits 4.825% and spread tops 1.2 points
French sovereign stress is resurfacing: 10-year OAT yields rose to 4.825% and the OAT–Bund spread moved above 120bp, the widest since the 2012 eurozone crisis. A larger-than-target deficit, record debt issuance, and rising servicing costs highlight deteriorating fiscal arithmetic amid political resistance to spending cuts. This elevates euro-area risk premia and can pressure EUR via renewed fragmentation concerns and tighter financial conditions.
AI Insight · NCFXEUR2USD/USDTAI Insight
▼ Bearish
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France’s 10-year government bond yield rose to 4.825%, while the spread over German Bunds widened to above 1.2 percentage points, the highest since the 2012 eurozone crisis. France’s budget deficit is expected to reach 5.4% of GDP next year, above its previous target. The Treasury plans to issue a record €340bn of debt next year, and debt-servicing costs are set to rise 13% to €91bn. Prime Minister Sebastien Lecornu is pushing to cut €54bn in public spending but faces political resistance ahead of the April 2027 presidential election.