France's 10-year borrowing cost hits 5%, highest since 2002
France's 10-year government bond yield touched 5.002% on Wednesday, its highest since 2002, as investors worried about a weak government's budget fight, a high deficit and widespread protests, Reuters reported. The premium over German bonds neared levels last seen in 2011.
AI-assisted · US Brief desk · Sources listed below
What happened
France's 10-year government bond yield touched 5.002% at 9:14 a.m. GMT on Wednesday, its highest level in 24 years, Reuters reported. It was last up about 8 basis points on the day, just below 5%. The extra yield investors demand to hold French bonds instead of German ones was about 1.57 percentage points, nearing levels last seen in 2011, during the eurozone debt crisis.
Why it matters
Axios said France's slide shows the risk facing other rich countries, including the U.S., that combine large deficits, political resistance to spending cuts and wary bond buyers. The U.S. 10-year Treasury yield was about 5.11% on Wednesday, slightly lower on the day, Reuters reported. Higher borrowing costs feed into mortgage, business and government interest bills.
What’s next
Whether France's budget passes parliament, whether protests ease, and whether the gap over German bonds keeps widening toward crisis-era levels.
More context
Why it's happening: France's weakened government is trying to pass a budget through parliament and cut a high deficit, Reuters said. A hotly contested election next year and widespread protests across the country are also weighing on French markets. Government bond yields have risen worldwide this year as an energy-price surge pushed central banks to raise interest rates.
By the numbers: 5.002%: France's intraday 10-year high. 2002: the last time it was this high. About 157 basis points: the gap over Germany. 2011: the last time that gap was this wide.
3 listed sources
References listed by US Brief; a source count is not a verification score.
Editorial sourcing notes
Yield levels are intraday market figures reported by Reuters and may differ slightly from closing data. Hero photo shows France's finance ministry in Paris (file photo, 2022).
Like US Brief? You can support it with a tip.