French 10-year bond yield hits 5% for first time since 2002

France's 10-year government bond yield surpassed 5% on Wednesday, October 21, its highest level since 2002, as investors demanded higher returns amid a budget standoff and violent street protests. The yield has risen for weeks as lawmakers debate a 2027 budget with billions in spending cuts to reduce France's debt, now around 120% of GDP. The spread over German 10-year bonds widened to nearly 160 basis points. The selloff pressures the government ahead of Friday's Moody's rating decision, with most economists expecting a downgrade. Prime Minister Sébastien Lecornu lacks a parliamentary majority for €43 billion in cuts, and weekend protests turned violent.