France's benchmark 10-year bond yield has spiked to a level not seen since 2002 as a monthslong selloff accelerates, pushing Finance Minister Roland Lescure to signal a pivot toward shorter-term debt issuance. The French Finance Ministry says no change in strategy is underway, even as borrowing costs climb across the curve.
Yield curve steepens sharply
France's 10-year bond yield jumped to 4.91% by early October, a level not touched since 2002. The 2-year yield climbed to 3.61%. That has stretched the gap between 2- and 10-year borrowing costs to roughly 1.3 percentage points. Over the past year, the 10-year yield has surged more than 130 basis points, rising from near 3.2% in early 2026 to past 3.5% by late May before the selloff accelerated through the fall.
The risk premium investors demand to hold French debt over German bunds has widened to its highest level since the 2011 Eurozone debt crisis, underscoring how sharply sentiment toward Paris has turned.
Lescure points to the short end
Lescure told The Wall Street Journal the government will need a strategic approach to new debt issuance as the selloff continues, and that a shift toward shorter maturities makes sense given the value he sees in the curve. He added that while recent 10-year auctions have gone smoothly, generating demand for 30-year debt is becoming harder. According to The Wall Street Journal: "a bit trickier at the moment" is how he described it.
The French Finance Ministry later told Bloomberg News that it is making no changes to its current bond issuance strategy, saying its approach simply continues to follow investor demand.
France joins a global shift
France isn't alone in leaning toward shorter debt. Both the U.K. and the U.S. have already shifted toward more short-term issuance, and the U.S. Treasury has used buybacks of long-term bonds to help suppress yields. France, however, has historically borrowed over longer horizons: the average maturity of its government debt stands at eight-and-a-half years, compared with six years for the U.S.
Political gridlock drives the selloff
The selloff is largely a function of domestic politics. Investors increasingly worry that gridlock in Paris makes it impossible to rein in spending, and despite Lescure's pledges to push cuts through Parliament, markets remain fearful the country is drifting toward a debt spiral. Analysts also point to a structural shift: traditional buyers of long-term sovereign debt, such as foreign governments and pension funds, are retreating, leaving highly indebted governments to adapt to weaker demand at the long end.
Source: Investing.com
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