France's 10‑year bond yield tops 4% amid fiscal and geopolitical pressures

On 23 July 2024 the yield on France's 10‑year government bond (OAT) rose above 4 %, the first time it had reached that level since 2008–2009. The jump follows a 70‑basis‑point rise since late February, driven by the Iran‑related oil price surge, heightened inflation expectations and the prospect of delayed European Central Bank rate cuts. Domestic factors also weigh heavily: a fragmented Parliament and an entrenched fiscal deficit have stalled any consolidation, prompting investors to price in a structural risk. Debt‑to‑GDP is projected to climb to about 120 % in 2026, with the annual interest bill expected to hit €64.8 billion in 2026 and €74.2 billion in 2027, up sharply from €31.6 billion in 2019. The widening spread between French and German bonds raises concerns about contagion to Italy and the broader eurozone if the French debt trajectory remains unchecked.