France debt sell-off deepens after violent weekend protests
A France debt sell-off gathered pace on Monday after a weekend of violent protests, with the French 10-year yield up seven basis points to 4.849% and the Cac 40 down 1% at the start of Paris trading.
A dim Parisian living room at dusk with a lamp switched on beside a closed window as a distant siren sounds outside.
Yields climb across the curve
French borrowing costs moved higher across the maturity range as investors reacted to the unrest, lifting the gap between French and German 10-year borrowing costs - the measure traders use to price the risk premium on French debt.
- The 10-year yield rose seven basis points to 4.849%.
- The two-year yield climbed 2.5 basis points to 3.571%.
- The 30-year bond, a benchmark for the government's long-term cost of borrowing, added three basis points to 5.397%.
- The euro slipped 0.4% against the US dollar in early Monday trading, falling to $1.1197.
Weekend violence across French cities
The unrest followed weeks of peaceful demonstrations over conditions in schools and the cost of living. Tens of thousands joined marches calling for more teachers and repairs to decrepit schools, but other groups clashed with police in cities including Paris, Bordeaux, Nice and Marseille. Police used teargas, public buildings were burned and hundreds of shops were looted.
Almost 2,400 people were arrested, the interior ministry said on Sunday. Emmanuel Macron condemned what he called the "unbridled violence" in a televised address on Sunday night, asking: "How can French people do this to France?"
Investors weigh the political risk
Jim Reid of Deutsche Bank said the events would not make it easy for the international community to be totally comfortable buying OATs, the French government bonds.
"With France already facing a difficult fiscal backdrop and the 2027 election approaching, the weekend adds another layer of political risk for markets," Reid said.
Strain on the budget plans
Higher borrowing costs land on French public finances already under pressure. France's debt-to-GDP stood at 1115.6% in 2025 with a budget deficit of 5.1%, against 94.3% and 4.3% for the UK. The government is preparing a budget that cuts pensions spending and funding for government departments, excluding defence.
There are growing fears that political pressure could derail those plans, pushing up borrowing and adding to the debt pile just as the deficit-reduction budget needs to clear parliament.
