The yield is above 4.5 per cent for the first time since 2008
France's 10-year government bond traded at 4.53 per cent on Wednesday. On Friday the yield rose above 4.5 per cent for the first time since 2008. The gap over the German 10-year is above 1 per cent for the first time since 2012. The market is charging France a higher yield than Italy or Greece.[1]
Prime Minister Sébastien Lecornu is taking 54 billion euros, or 61.8 billion dollars, of spending cuts to parliament in early October. The finance ministry said debt is put at 119.3 per cent of gross domestic product this year and 121.7 per cent in 2027. The deficit is put at 5.4 per cent this year, with a stated aim of moving toward 5 per cent. The cut package is the tool on offer for lowering the yield at which the debt is rolled.[1]
More than half the paper sits abroad
HSBC strategist Chris Attfield said non-domestic ownership of OATs exceeds 50 per cent. If that share proves less sticky, the question is the price at which a replacement buyer appears. If domestic banks and insurers keep holding the paper, the gap could remain a political premium without turning into a forced sale.[1]
The vote is on 17 November. If the 2027 budget is not adopted by that date and the 10-year yield is still above 4.5 per cent, the extra compensation investors already demand has not narrowed.[1]