Overview
- French 10‑year OAT yields climbed above 5% in trading on Wednesday and Thursday, reaching just over 5.1% and marking the highest levels since the early 2000s.
- The gap between French OATs and German Bunds widened to about 158–170 basis points and the OAT–BTP distance has also expanded, while Italian 10‑year yields rose toward roughly 4.6% and BTP–Bund spreads moved into the 117–124 basis‑point range.
- Markets say the move reflects political unrest and doubts that the Macron government can deliver measures to cut a reported deficit above 5.4%, which has reduced investor confidence in France's fiscal outlook.
- Analysts point to concentration of foreign holders—Unicredit estimates more than 55% of French debt is held by non‑domestic investors—as a key driver of rapid reallocations into safer German bonds, and higher energy prices are adding inflation pressure that pushes yields up across Europe.
- An imminent Moody's rating review is seen as a potential catalyst for further volatility and contagion, and rising borrowing costs for governments and companies could translate into higher interest costs and tougher conditions for households and firms.