French 10-Year Bond Risk Premium Hits 15-Year High as Fiscal Concerns Mount

France's risk premium over German Bunds surged to 173.58 basis points Thursday, the widest since November 2011 during the euro zone debt crisis, as investors grew increasingly uneasy about the country's fiscal outlook amid ongoing street protests. The French 10-year yield rose 11.5 basis points to 5.11%, after peaking at 5.1415%, its highest level since July 2002. Political uncertainty ahead of next year's presidential election and Paris' difficulty passing a budget further weighed on sentiment, though German 10-year yields fell 4 basis points to 3.38% on safe-haven demand. Yield spreads widened across the euro zone. Belgium's gap over Bunds expanded more than 10 basis points to 111.28, its highest since 2012. Italy's rose 10.5 basis points to 123, Spain's widened 7.5 to 71, and Greece's increased 8.5 to 102. Citi economist Giada Giani noted that while European institutions are stronger than 15 years ago, "re-emerging euroscepticism is a constraint." Money markets now price the ECB deposit rate at 3.26% by late 2027, up from the current 2.50%.