France's 10-year spread over Bunds widened to 141.5 basis points as ECB officials reportedly see no case for their anti-fragmentation tool. German bill yields fell, and markets price a December rate hike.
The 10-year French yield premium over German bonds is at the highest since 2012, near 140 basis points. Source
Euro-area front-end yields eased on Monday, but the French bond premium didn't follow. The 10-year Bund yield fell 2 basis points to 3.47% in thin trade, with Japan shut and the US on a partial holiday. The 10-year spread of France's benchmark Obligations assimilables du Trésor (OAT) over Bunds, though, widened 3 basis points to 141.5 basis points. It touched 158.67 basis points earlier this month, the widest since November 2011. The ECB has two separate problems, and markets are pricing them in different places.
