French Bond Spreads Widen as Protests Shake Markets

Violent protests in France are widening the country's government bond spread over Germany, intensifying concerns that any future government will struggle to implement fiscal reforms needed to stabilize public finances. The unrest has injected uncertainty ahead of presidential elections, with betting markets favoring right and center candidates while far-left candidate Mélenchon's chances have declined. Parliament faces a first vote Tuesday on the 2027 budget's revenue section, though parties appear focused on election positioning rather than addressing fiscal issues. French 10-year bond spreads reached 158 basis points intraday, with Monday's close at 147bp marking a new high since the sovereign debt crisis. The European Central Bank's ability to respond remains limited by energy price pressures on inflation, while a Moody's rating review later this week presents another test.