The yield on France's benchmark 10-year government bond briefly crossed the 5% threshold for the first time since 2002 on Wednesday, as the country grapples with multiple crises. Mass civil unrest resulted in a swathe of violent protests and rioting over the weekend, amid broad public dissatisfaction. Meanwhile, the French government is struggling to pass a federal budget through a divided parliament as market pressure for significant fiscal consolidation mounts in response to a swelling national debt and wide deficit.
The yield on the 10-year OAT was last seen around 6 basis points higher at 4.9794%, after rising above 5% shortly before 11:30 a.m. in Paris (5:30 a.m. ET).
Financial markets have been piling pressure on France to fix its finances, with investors concerned that a politically fractured parliament will struggle to agree on the spending cuts required to bring down the country's ballooning deficit and national debt.
Lawmakers are in the process of negotiating the 2027 fiscal budget, with Prime Minister Sebastien Lecornu saying he will target 54 billion euros ($60.6 billion) in spending cuts.
France is currently subject to the EU's excessive deficit procedure, with the bloc recommending Paris bring its national deficit closer to 3% of GDP, compared with the 5.1% reached at the end of last year.