French Bond Yield Premium Over Germany Hits Two-Week High

The yield premium on French 10-year government bonds over German debt climbed to a two-week high on Oct. 19, signaling renewed pressure on France’s borrowing costs amid protests and budget concerns. The gap reached about 146 basis points as France’s 10-year yield rose 13 basis points to about 4.9%. Germany’s comparable yield increased four basis points to 3.45%. A basis point is 0.01 percentage point. The wider gap reflects the additional yield investors demanded to hold French government debt instead of German bonds. It remained below a peak of nearly 160 basis points earlier in October. The French-German bond spread widened previously . “The fact this is coming after a weekend of protests shows that hopes for reform are in remission,” said Hank Calenti, global market strategist at SMBC.

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