French bond yields hit 24-year high as unrest and budget deadlock rattle markets

France's 10-year government bond yield surpassed 5% for the first time in 24 years, driven by political instability and the government's failure to pass its delayed budget, spooking financial markets. The yield on the benchmark Oat bond rose over 8 basis points to 5% in morning trading before easing to 4.99%. The unrest stems from protests that began in September over school conditions and evolved into demonstrations against the rising cost of living, with riots, looting, and fires reported in multiple cities. France's budget deficit was 5.1% of GDP in 2025, with debt at 115.6% of GDP, and forecasts show both increasing without action. International lenders, including Japanese fund managers, have withdrawn or demanded higher rates, while the euro has weakened against major currencies due to the ongoing political risk premium.