French Bond Yields Hit 24-Year Highs as Crisis Deepens, German Debt Rallies to Two-Month Lows

A deepening selloff in French government bonds pushed the country's 10-year yield to 4.95-5.01%, its highest level since 2002, as mounting fiscal pressures, social unrest and political uncertainty drove investors to demand sharply higher compensation for holding French debt. The French-German 10-year yield spread widened to roughly 1.6 percentage points, the largest gap in 15 years and a level not seen since the eurozone sovereign debt crisis in 2011. France's five-year credit default swap, the cost of insuring against a French default, rose to 81 basis points, the highest among major EU countries and the UK.

German Bunds rallied on the flight-to-safety trade, pushing yields to two-month lows as investors rotated out of French paper and into the eurozone's benchmark safe-haven asset. The divergence highlighted broader concern that the French crisis could raise borrowing costs across Europe's heavily indebted economies, echoing patterns from the 2011 sovereign debt crisis.

France's public debt has reached a record $4 trillion, equivalent to 119% of GDP and the highest ratio since the immediate aftermath of World War II. The fiscal deterioration has been compounded by political paralysis, with far-right and far-left candidates leading polls and bond investors concluding that no government is likely to impose meaningful austerity. Street protests, including student demonstrations over crumbling school infrastructure, have intensified the sense of social and fiscal crisis, with analysts warning the country is approaching a critical decision point.