Business
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French Borrowing Costs Rise Above US Treasury Yields for First Time Since 2013
French borrowing costs climbed on Thursday as investors doubted the government could pass next year's budget after nationwide protests. The French 10-year yield moved above equivalent US Treasury yields for the first time since 2013.
By Haut Monde Post
• October 22, 2026
• 3 Min Read
Yields hit multi-year highs
France's 10-year bond, the obligation assimilables du Trésor (Oat), rose nine basis points to 5.089% in early Thursday trading, its highest level since July 2022. That put French borrowing costs above the equivalent for US Treasury bonds for the first time since 2013. A day earlier, the yield had crossed 5% for the first time since 2002.
The gap between French and German 10-year borrowing costs, used as a gauge of the risk premium investors demand on French debt, reached its highest level in almost 15 years.
Protests and a blocked budget
The bond volatility comes as the government struggles to pass a budget for next year, while the country recovers from widespread protests that turned violent last weekend. Tens of thousands of people joined peaceful marches demanding more teachers and repairs to decrepit schools, but groups clashed with police in cities including Paris, Bordeaux, Nice and Marseille.
The aftermath of the unrest includes:
- •Public buildings were attacked, and thousands of shops and businesses were looted.
- •The interior ministry said there had been nearly 2,400 arrests.
- •Investors fret that the government is struggling to pass a federal budget after the protests.
Gridlock, deficits and debt
Parliamentary gridlock has blocked President Emmanuel Macron's plans to raise the state pension age from 62 to 64, along with a package of measures aimed at curbing state expenditure. In 2025 the deficit ran at 5.1% of gross domestic product, and debt stood at 115.6% of GDP.
The country is also grappling with higher inflation triggered by the war in Iran, with heavily indebted governments coming under acute pressure.
Sell-off spreads across Europe
Jim Reid, a market strategist at Deutsche Bank, said the sell-off in French government bonds was starting to ripple out to other countries. He noted the Italian 10-year spread over German bonds widened 3.8 basis points to 116 basis points, while Spain's widened 3.1 basis points to 66 basis points, its widest since June 2025.
Carsten Brzeski of ING said rising yields had reinforced the European Central Bank's restrictive policy stance before its interest rate decision next week. The ECB last raised its key rate to 2.5% in September. Brzeski expects a hold and no decision on a further hike until December:
"The ECB is very likely to stay on hold next week and will delay any next rate hike decision to December."
He added that without any solution, bond markets had taken over the ECB's role, making rate hikes less likely.
