French Unrest Deepens Debt Crisis Fears as Stocks, Bonds, and Euro Slide

French assets fell sharply on Monday as social unrest and debt concerns intensified, with Paris stocks, government bonds, and the euro all declining. The CAC 40 index dropped nearly 1%, while the 10-year bond yield jumped 7 basis points to near its highest level in decades. Weekend protests across France drew hundreds of thousands, with over 2,000 arrests and scenes of arson and clashes. Analysts warn of a potential debt crisis, citing political paralysis, a 5% budget deficit, and investor skepticism about fiscal consolidation. Foreign ownership of French debt has risen to nearly 60%. Uncertainty over the 2027 budget and next year's presidential election, where Marine Le Pen leads polls, compounds the pressure. The ECB may intervene if spreads disrupt liquidity, but any bailout would require stringent reforms, raising fears of higher taxes and further unrest.