25.08.202516:50:08UTC+00France 10-Year Bond Yield Spikes on Growing Political Risk

On Monday, France's bond market exhibited new signs of tension as the 10-year yield surged to 3.51%, a level not witnessed since March. This increase followed Prime Minister François Bayrou's announcement of a parliamentary confidence vote scheduled for September 8. Bayrou is seeking backing for his fiscal reform agenda, which is central to the 2026 budget revealed in mid-July. The budget includes a contentious proposal to reduce the number of public holidays, with the aim of enhancing productivity and addressing the country's escalating debt. Bayrou faces criticism from both the left and right, leaving him susceptible to a no-confidence vote. This situation mirrors what happened to his predecessor Michel Barnier in 2024, who was ousted after a mere three months in office. With France's deficit standing at 5.8% of GDP in 2024—significantly above the EU's 3% threshold—the country is once more under rigorous examination for its public finances. Concurrently, market participants are closely monitoring policy developments from both sides of the Atlantic.