France Now Borrows More Dearly Than America as Protests Loom
French ten-year borrowing costs rose about nine basis points to just over 5.08%, moving above the equivalent American yield for the first time since 2013. The premium over German debt is the widest in almost fifteen years. Protests are banned across central Paris today and in Lyon on Saturday.
France crossed 5% on Wednesday for the first time since 2002, and the move is now spilling outwards: Italy’s spread over German debt widened by almost four basis points and Spain’s is the widest since June last year. The cause is a budget nobody can pass sitting on top of a weekend of rioting, with the deficit at 5.1% of national income and debt at 115.6%. Carsten Brzeski of ING drew the uncomfortable conclusion for Frankfurt: the European Central Bank will “very likely stay on hold next week”, and “without any solution, bond markets have taken over the ECB’s role, making rate hikes less likely”. The policing is on the same scale as the borrowing. Today’s ban covers the Elysée, both chambers of parliament, the Louvre, the Champs-Élysées, Bastille and République from eight in the morning until eight at night; a junior interior minister said the weekend police presence would be 20% larger than last. In Lyon, where the mayor says between 150 and 200 shops were looted, all protests are banned on Saturday. Thailand, Malaysia and China have issued travel advisories.