Al Arabiya Net _ Yields on 10-year French government bonds rose to 5% today, Wednesday, recording their highest level in 24 years, in the latest indication of growing investor anxiety regarding France's ability to restore balance to its fragile public finances.
This surge comes at a time when government bond yields worldwide have witnessed a remarkable rise during the current year, driven by elevated energy prices that have prompted central banks to continue monetary policy tightening and raising interest rates.
The yield on French bonds maturing in 10 years reached 5.002% during trading, before settling near the 5% mark, rising by approximately 8 basis points during the session, according to Reuters agency.
Spreading Gap Against German Counterparts Widens to Around 157 Basis Points
Concurrently, the spread between 10-year French bond yields and their German counterparts widened to approximately 157 basis points, approaching levels recorded in 2011. This spread reflects the additional premium demanded by investors to hold French debt over German bonds, which serve as the benchmark for safety in the Eurozone.
French bonds face escalating pressure as the government, operating under a more fragile political situation, seeks to pass the budget through Parliament and reduce the elevated public finance deficit.
Furthermore, uncertainty ahead of the elections scheduled for next year and widespread protests across France add further pressure on local markets and escalate borrowing costs.
