France's 10-Year Bond Yield Tops Italy's at 4.85% as Riots Deepen Fiscal Strain

France’s 10-year bond yield climbed to about 4.85% on Monday, recording the sharpest increase in the G7 and overtaking Italy’s yield of roughly 4.52% after weekend protests over living costs and school conditions turned violent. Authorities arrested close to 2,400 people during the unrest, the Guardian reported, while Carrefour expects repair costs above €10M and placed some franchise staff on furlough. The yield gap between French and German 10-year bonds widened to near 145 basis points, up from around 85 basis points in early September. France’s budget deficit is expected to reach 5.4% of GDP this year—exceeding the EU’s 3% limit—while Prime Minister Sébastien Lecornu needs about €54B in savings for 2027 without holding a parliamentary majority. French equities and banking stocks declined alongside sovereign debt, with the CAC 40 falling back below support near 7,890 to trade about 10% below its August peak. BNP Paribas, Crédit Agricole, and Société Générale each dropped more than 2%, according to the Telegraph, while the euro slipped to about $1.12, near its weakest level since May 2025. Higher sovereign borrowing costs are also filtering into household finances ahead of credit rating reviews by Moody’s on Oct. 23—where France holds an Aa3 rating with a negative outlook—and S&P on Nov. 27. Average 20-year mortgage rates reached 3.66% in October, up from 3.17% early this year according to broker Pretto, adding roughly €63 per month to a €250,000 loan. "With France already facing a difficult fiscal backdrop and the 2027 election approaching, the weekend adds another layer of political risk for markets." — Jim Reid, analyst at Deutsche Bank