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.

France’s proposed fiscal plan projects a public deficit of 5.4% of gross domestic product in 2026 and 5.0% in 2027. Those figures measure annual shortfalls. The plan puts total public debt at 119.3% of GDP in 2026 and 121.7% in 2027.