French borrowing costs overtake US amid budget turmoil

AI desk brief

French 10-year borrowing costs jumped 9bp to 5.089%, the highest since July 2022 and above US Treasuries for the first time since 2013, as budget gridlock and protest-related turmoil hit French debt. The France-Germany 10-year spread widened to nearly a 15-year high, with spillover to Italy and Spain. ING’s Carsten Brzeski said the bond selloff reinforces the ECB’s restrictive stance ahead of next week’s decision, with the bank likely to stay on hold and delay any further hike call to December.

For metals, the immediate channel is higher euro-area yields and a firmer real-rate backdrop, which is typically negative for gold and silver. Any fiscal resolution could ease pressure on European bonds, but absent that, bond markets are effectively constraining ECB easing.