Protesters wave French flags as they pass by a fire during clashes before the start of a demonstration against the “high cost of living” in Marseille, southern France, on October 17, 2026.
Thibault Moritz | AFP | Getty Images
France’s benchmark 10-year bond yield briefly exceeded the 5% threshold on Wednesday for the first time since 2002, as the country faces multiple crises.
Massive civil unrest led to violent protests and riots over the weekend amid widespread public discontent. Meanwhile, France’s government is struggling to pass a federal budget through a divided parliament, as market pressure mounts for major fiscal restructuring amid rising national debt and huge budget deficits.
yield of 10 years OAT It was last seen rising about 6 basis points to 4.9794%, topping 5% just before 11:30 a.m. ET in Paris.
French 10 year government bond
Financial markets are increasing pressure on France to rebuild its finances, with investors worried that a politically divided parliament will struggle to agree on the spending cuts needed to reduce the country’s ballooning budget deficit and national debt.
Lawmakers are negotiating the 2027 budget, with Prime Minister Sébastien Lecorne saying he aims to cut spending by 54 billion euros ($60.6 billion).
France is currently subject to the EU’s excessive deficit procedure, which recommends Paris bring the national deficit closer to 3% of GDP, down from the 5.1% it reached at the end of last year.
Budget negotiations have been a source of great political turmoil for France in recent years. After last year’s negotiations failed to reach a breakthrough, Lecorne used emergency legislation in February to force a vote on this year’s budget without parliamentary approval.
French Finance Minister Laurent Lescure told French radio station RTL on Wednesday that the government was prepared to bypass parliament again if necessary to force a vote on next year’s budget.
Lecourt said in an interview with French radio station RTL on Wednesday that he was confident the budget would be passed within the allotted deadline.
“I am convinced of this because we have no choice,” he said. “We have the tools to pass this bill, and I am confident it will be successful.”
He pointed out that the government has “guardrails” in place to force a budget vote, such as Article 49, Paragraph 3 of the French Constitution, which allows the prime minister to force a vote through parliament without a vote.
“If we veer off course, we will activate the guardrails,” he told RTL.
When disagreements over spending reached a climax, the previous government was overthrown. Lecorne himself resigned less than a month into his term over a budget dispute, but was reappointed days later by President Emmanuel Macron.
But complicating the government’s efforts to rein in France’s budget deficit are widespread protests that have become increasingly violent since they began as student protests in Paris last month. The violence culminated in rioting and looting over the weekend, with authorities estimating damages could run into the hundreds of millions of euros.
Bond traders are also looking at next spring’s French presidential election as a potential further destabilizing factor. The current front-runner, right-wing candidate Marine Le Pen, said earlier this month that she could keep the budget deficit below 3% within 18 months of being elected, but critics have questioned the credibility of her savings proposals.
