The premium investors demand on the French 10-year versus lower-risk German
Bunds climbed to 120 bps, the highest since 2012, as market participants brace
for possible political turmoil next year. Analysts had warned the spread could
reach this level if fiscal and political uncertainty worsened. During a recent
global bond sell-off, political and fiscal volatility has left French debt
lagging: the France-Germany 10-year spread has nearly doubled in the past four
months and France’s long-term borrowing costs are at their highest since 2002.