Investors are rushing to sell French bonds, equities and the euro amid concerns that the country's public debt is climbing toward 120% of gross domestic product, nearly double that of Germany, according to a Bloomberg report. The yield on 10-year French government bonds has jumped by more than 1 percentage point since June and stands at about 4.9%, close to its highest level since 2002, while the spread over equally dated German bonds has more than doubled since May to 141 basis points. The French government unveiled a draft budget on Thursday, October 1, proposing deep spending cuts to bring the deficit back to its original target of 5% this year, but the plan must pass through a highly divided parliament. Andrzej Szczepaniak, senior Europe economist at Nomura International, expects the French bond yield spread could widen to 200 basis points by the end of 2027. French Finance Minister Roland Lescure insists the government can still manage the situation.
Investors are selling the euro amid French debt worries, weakening EUR versus USD.
Investors dumping French bonds amid debt concerns pushes the 10Y yield up toward 4.9%, near its highest since 2002.
