France's 10-year yield reached 4.9% as unrest complicated the fight over a deficit-cutting budget.
France's 10-year yield rose to 4.9% on October 19 as markets reacted to nationwide unrest and fresh doubts about budget reform. Official data put public debt at €3.5955 trillion, or 119% of GDP. The protest turnout was about 550,000 by the Interior Ministry's count.
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French markets fell on Monday after a weekend of nationwide protests and rioting highlighted the political difficulty of fixing the country's strained public finances.
France's 10-year bond yield rose 13 basis points to about 4.9% on October 19, Reuters reported. The CAC 40 fell 1.5%, major French banks dropped about 3%, and the euro weakened against the dollar, pound and yen.
The demonstrations began as a student-led movement over school conditions before broadening to include anger about living costs, inequality and public services. The Interior Ministry said about 550,000 people marched across France on October 17, while the CGT union estimated 800,000.
Most marched peacefully, but rioting broke out in several cities. Limoges City Hall was set on fire, protesters broke into Marseille City Hall, and a tourist office burned in Lyon. Prime Minister Sébastien Lecornu said about 1,200 people were arrested and more than 150 police officers were injured.
Investors had already been focused on whether France's divided parliament could pass a budget that reins in the deficit. Reuters reported that Monday's market moves reflected concern that the unrest could make spending cuts and other reforms even harder to deliver.
France entered the crisis with a large and growing debt load. INSEE put Maastricht debt at €3.5955 trillion at the end of the second quarter, up €59.6 billion from the previous quarter and equal to 119% of gross domestic product.
The 10-year yield reached 4.99% in early October, its highest level since 2002, before returning to about 4.9% on Monday. The gap between French and German 10-year yields widened to 146 basis points, showing the extra premium investors demanded to lend to France.
The link is political rather than mechanical. Investors want a budget that reins in the deficit, while the protests show how difficult spending cuts and reform may be to deliver.
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@adamemediaIt really is an IQ test if you think the French protests are about immigrants and not the dire state of economy.@adamemediaIt really is an IQ test if you think the French protests are about immigrants and not the dire state of economy.@adamemediaIt really is an IQ test if you think the French protests are about immigrants and not the dire state of economy.@adamemediaIt really is an IQ test if you think the French protests are about immigrants and not the dire state of economy.
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