After a weekend of riots, French 10-year yields rose 7.8 basis points to 4.87% and the spread over Bunds widened to 145 basis points. The European Central Bank is treating higher long-term rates as tightening, and markets price about a 20% chance of an October hike.
French 10-year borrowing costs have overtaken Italy’s, flipping a spread that for years defined eurozone periphery risk. Source
Monday's euro-area bond sell-off was led by France, fresh off a weekend of riots over energy prices, living costs and public services. On London Stock Exchange Group (LSEG) data cited by Dow Jones, the yield on the 10-year OAT, France's benchmark government bond, rose 7.8 basis points to 4.87%, while the 10-year Bund yield added just 1 basis point to 3.42%. The spread widened to 145 basis points, a two-week high and up from 141.5 basis points on 12 October. Equities followed. Reuters had the CAC 40 down 1.4% against 0.8% for the STOXX 600, with BNP Paribas, Société Générale and Crédit Agricole off 2.2% to 2.6%. Retailers took direct damage: LVMH fell about 2.2% after looting, and Carrefour lost 1.8% after its chief executive said 50 stores had been hit, with repairs above €10m.
