French Bond Yields Overtake US as Budget Turmoil Deepens

French borrowing costs have risen above those of the United States, with the country's bond market hit by a fresh bout of selling as it recovers from weekend protests, The Guardian reported. The move marks a significant deterioration in investor sentiment toward French sovereign debt, which has traditionally traded at a premium to US Treasuries.

The sell-off follows violent protests that saw public buildings burned and shops looted, unnerving investors and widening the spread between French and German borrowing costs. The gap between French and German yields is a closely watched gauge of perceived risk in the eurozone's second-largest economy, and its widening signals that markets are demanding a higher premium to hold French debt.

The budget turmoil has shaken confidence in France's fiscal trajectory, with investors reacting to the political instability by reducing exposure to the country's bonds. The rise in French yields above US levels is a notable reversal for a market that has long been viewed as a core eurozone safe haven.

For investors, the development underscores the risks of holding French sovereign debt amid fiscal and political uncertainty. The widening spread against German bunds suggests markets are differentiating between eurozone credits rather than treating them as a uniform bloc. The coming weeks will be closely watched for whether the sell-off stabilises or accelerates, with the budget situation and the aftermath of the protests likely to remain the key drivers of French bond market sentiment.