French 10-year bond tops 5% for first time since 2002

The French 10-year bond has topped 5% for the first time since 2002, with the risk premium at 156 basis points. It is the clearest sign yet that the market is pricing political risk in the eurozone.

The benchmark ten-year French bond has crossed the 5% threshold, a level not seen since 2002. The country's risk premium now stands at 156 basis points. Two figures that, together, tell an uncomfortable story: the market has stopped treating France as a safe-haven asset and is starting to scrutinise it the same way it looks at other southern neighbours.

## What peine to the French bond

The ten-year bond's yield topped 5% for the first time in more than two decades. The risk premium — the spread over the German bond — climbed to 156 basis points. This is not an isolated afternoon move: it is the confirmation of a trend that had been building for weeks.

The immediate trigger has to do with political uncertainty in France. When an investor buys government debt, they are lending money to a state and charging for the risk of not being repaid. If that risk rises, the interest rate rises with it. And 5% is a round figure that hurts: it makes financing more expensive for the state, for companies and, by extension, for mortgages.

## Why it matters beyond France

France is not Greece. It is the eurozone's second-largest economy and one of the pillars of the European project. Its debt paying 5% while Germany pays considerably less forces a rethink of the hierarchy of risk the market had assumed for years.

For Spain, the reading is twofold. On the one hand, the Spanish spread over the German bond has moved in parallel and is worth watching. On the other, if the German bund remains a safe haven and other premiums widen, financing costs for Spanish companies and households tend to rise. This is not a prophecy: it is market mechanics.

## The figure nobody wanted to see

5% is not just a number. It is the level at which many pension funds and insurers start recalculating their portfolios. When a major country's debt pays that, money that previously went into equities or riskier assets finds a serious competitor in fixed income.

That can chill productive investment and make credit more expensive. And if the French risk premium keeps climbing, the debate over fiscal discipline in the eurozone will return to the front line. With one twist: this time the focus is not on the south, but on the heart of Europe.