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France 10-year bond spread widens above 150 bps amid policy pressure

France's 10-year borrowing costs are near 5%, with the OAT-Bund spread at the widest since the euro-area debt crisis.

Reported · Written up by our desk · Government Bonds

Forexlive reports that France is facing renewed pressure from the bond market as the spread between French and German 10-year government bonds surged above 150 basis points last week, the widest level since the euro-area debt crisis.

According to Forexlive, French borrowing costs have approached 5%, as concerns over the deficit, the debt trajectory, and political fragmentation intensified ahead of the 2027 presidential election.

The outlet says the move matters because it can create a feedback loop, where higher bond yields raise France's interest bill and worsen the fiscal outlook, potentially leading investors to demand a larger risk premium.

Forexlive adds that while the dynamic can hurt, it can also force policymakers to change course, since governments ultimately need investors to fund their deficits.

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