A protester waving a French national flag walks past a fire during clashes prior to the start of a demonstration to protest against the “high cost of living”, in Marseille, southern France, on Oct. 17, 2026.
Thibaud Moritz | AFP | Getty Images
The yield on France’s benchmark 10-year government bond briefly crossed the 5% threshold for the first time since 2002 on Wednesday, as the country grapples with multiple crises.
Mass civil unrest resulted in a swathe of violent protests and rioting over the weekend, amid broad public dissatisfaction. Meanwhile, the French government is struggling to pass a federal budget through a divided parliament as market pressure for significant fiscal consolidation mounts in response to a swelling national debt and wide deficit.
The yield on the 10-year OAT was last seen around 6 basis points higher at 4.9794%, after rising above 5% shortly before 11:30 a.m. in Paris (5:30 a.m. ET).
French 10-year government bond
Financial markets have been piling pressure on France to fix its finances, with investors concerned that a politically fractured parliament will struggle to agree on the spending cuts required to bring down the country’s ballooning deficit and national debt.
Lawmakers are in the process of negotiating the 2027 fiscal budget, with Prime Minister Sebastien Lecornu saying he will target 54 billion euros ($60.6 billion) in spending cuts.
France is currently subject to the EU’s excessive deficit procedure, with the bloc recommending Paris bring its national deficit closer to 3% of GDP, compared with the 5.1% reached at the end of last year.
Budget talks have become a source of major political turbulence for France in recent years. After failing to reach a breakthrough in last year’s negotiations, Lecornu used emergency legislation to force this year’s budget through without parliamentary approval in February.
French finance minister Roland Lescure told French radio station RTL on Wednesday that the government was willing to bypass parliament again, if necessary, to force next year’s budget through.
Speaking to French radio station RTL on Wednesday, Lescure said he was confident a budget would be passed within the allotted timeframe.
“I’m convinced of this because we have no choice,” he said. “We have the tools to get it passed, so I’m convinced we’ll succeed.”
He noted that the government has “guardrails” available to it to force the budget through, including Article 49.3 of the French constitution, which allows the Prime Minister to force the adoption of a bill through the National Assembly without a vote.
“If we veer off course, we’ll activate the guardrails,” he told RTL.
Previous administrations were ousted when spending disagreements came to a head. Lecornu himself resigned less than a month into his tenure over budget divisions, only to be reappointed by President Emmanuel Macron days later.
But complicating the government’s efforts to bring the French deficit under control are widespread protests that have turned increasingly violent since starting as a Parisian student movement last month. The unrest culminated in rioting and looting over the weekend, with officials estimating that the damages could be worth hundreds of millions of euros.
Bond traders are also looking ahead to next spring’s French presidential election as a potential source of further instability. Current frontrunner, right-wing candidate Marine Le Pen, said earlier this month that she could bring the deficit below 3% within 18 months of being elected, but critics have questioned whether her proposed savings are credible.