French protests widen bond gap with Germany

France's bond and stock markets faced fresh selling on Monday after weekend protests left buildings burned, shops looted, and thousands arrested, widening the gap between French and German 10-year borrowing costs. The French 10-year yield rose seven basis points to 4.849%, while the two-year yield climbed 2.5 basis points to 3.571%, reflecting investor unease over political risk ahead of the 2027 election and fiscal challenges. The violence followed weeks of peaceful demonstrations over school conditions and living costs, with analysts noting the unrest adds strain to France's public finances, as the government prepares a budget to cut spending and reduce its 115.6% debt-to-GDP ratio.