French borrowing costs surpass US for first time since 2013

French borrowing costs rose above US Treasury yields for the first time since 2013 on Thursday, as investor confidence in France’s ability to pass a federal budget eroded following violent weekend protests. The 10-year bond yield hit 5.089%, its highest level since July 2022. The risk premium on French debt over German bonds reached its widest in nearly 15 years, with the sell-off spreading to Italian and Spanish bonds. The turmoil stems from parliamentary gridlock over pension reforms and spending cuts, while France’s deficit stood at 5.1% of GDP in 2025. The unrest involved nearly 2,400 arrests and looting in major cities, complicating President Emmanuel Macron’s fiscal agenda. Analysts say the ECB is likely to pause rate hikes in December, as bond market pressure has replaced the central bank’s restrictive monetary policy role.