France 10-year bond yield briefly tops 5% for first time since 2002 as minister signals possible bypass of parliament
France’s 10-year government bond yield briefly rose above 5% on Oct. 21, the first time since 2002, as the country faced a budget standoff, market pressure over deficit reduction, and unrest tied to nationwide protests. CNBC reported that the benchmark 10-year OAT yield moved above 5% shortly before 11:30 a.m. Paris time before easing to around 4.9794%, still up about 6 basis points. At the center of the dispute is France’s 2027 budget, with Prime Minister Sebastien Lecornu targeting €54 billion, or about $60.6 billion, in spending cuts. France remains under the European Union’s excessive deficit procedure, with the EU urging the country to bring its deficit close to 3% of GDP after it stood at 5.1% of GDP at the end of last year. Finance Minister Roland Lescure said the government was prepared to use Article 49.3 of the French Constitution if needed, allowing a bill to pass without a vote in the National Assembly. The fiscal debate is unfolding as protests that began last month in Paris have turned more violent, with officials estimating losses in the hundreds of millions of euros, while traders are also watching next spring’s presidential election as another source of uncertainty.
