French debt concerns drive BTP-Bund spread above 120 basis points

The BTP-Bund spread rose above 120 basis points on Monday, October 5, as market tensions increased regarding French public debt. French 10-year bond yields (Oat) have surpassed those of Italian BTPs, a significant shift in the Eurozone debt landscape.

Yields for the Italian 10-year BTP reached approximately 4.63%, while the German Bund remained around 3.44%. The French Oat yield climbed to 4.9%, driven by concerns over the 2027 budget proposal and potential political instability in France. This volatility comes despite improved manufacturing PMI data in several Eurozone countries.

In broader markets, the Euro hit a 17-month low against the US Dollar at 1.12. European stock markets showed mixed results, with the Paris exchange declining by 1% while Milan remained relatively flat.