France's 10-year bond yield rises above 5% for the first time since 2002

The yield on France’s benchmark 10-year government bond rose above 5% on Wednesday 21 October, its highest level since 2002, Reuters reported.

Reuters said French bond yields rose again as investors assessed the effect of widespread protests across the country on a government already trying to shore up the public finances. The premium investors demand to hold French 10-year debt over German 10-year Bunds moved back towards the 15-year high of nearly 160 basis points reached in early October, according to Reuters. Bond yields rise when prices fall.

Sharecast reported that 10-year French yields (known as OATs) rose above 5% “for the first time in nearly three weeks”, and put the spread over German Bunds at 157 basis points.

French shares rose despite the move in bonds. The CAC 40 index gained 1.1% on Wednesday, Sharecast said. Supermarket operator Carrefour fell about 13% to 14% after cutting its guidance, citing the effects of the protests, according to Reuters and Sharecast.

Reserve Bank of Australia Deputy Governor Andrew Hauser, discussing the rise in long-term interest rates around the world at a conference in Sydney on Wednesday, said France “has had a bit of an excess”, according to the RBA’s transcript.

For earlier moves after the weekend riots, see our earlier report.