French-German Bond Yield Gap Touches 157 Basis Points as French Yield Tops 5%

The yield premium on French 10-year government bonds over comparable German debt reached about 157 basis points on Oct. 21 as France’s borrowing costs crossed a level unseen since 2002.

France’s 10-year yield had touched 5.002% as of 5:14 a.m. ET (09:14 UTC), moving above 5% for the first time since July 2002. The yield was up about eight basis points on the day in a morning market observation.

The French-German yield gap narrowed to about 150 basis points later on Oct. 21. A basis point is 0.01 percentage point. The gap measures the extra return investors demand to hold French government debt rather than comparable German bonds.

French bonds had already faced pressure as deficit concerns intensified. Lawmakers are examining France’s 2027 budget bill, which was filed Oct. 1. The government forecasts public deficits of 5.4% of gross domestic product in 2026 and 5.0% in 2027.

France’s public debt stood at €3,595.5 billion, or 119.0% of GDP, at the end of the second quarter of 2026. Higher yields increase the cost of issuing new debt and refinancing existing obligations.

Moody’s has a rating review scheduled for Oct. 23. France’s current rating is Aa3 with a negative outlook.