France has been hit by a fresh wave of selling in its bond and stock markets after violent protests over the weekend left public buildings burned, hundreds of shops looted and thousands of arrests across the country. Almost 2,400 people have been arrested in France, the interior ministry said on Sunday, with police deploying teargas in confrontations with protesters. The French president, Emmanuel Macron, condemned the “unbridled violence” in a televised address on Sunday night.
How can French people do this to France?” he said. The chaos has spooked investors in France’s government debt, with the yield on its 10-year yield rising by 10 basis points to 4.89% on Monday. Yields rise when prices fall.
This widened the difference between the French and German 10-year borrowing costs – which is a metric for the risk premium attached to French debt – towards the highest levels seen in 14 years. Analysts at Goldman Sachs said European sovereign risk was back in focus, with fiscal concerns about France raising the question of whether there could be a repeat of the eurozone debt crisis of 15 years ago. But the fundamental fiscal challenges for some countries – especially in France – look harder now than in 2011-15,” the investment bank said.
The two-year French bond yield rose by eight basis points to 3.63%. Concerns about France’s instability knocked the euro down to a 17-month low against the pound on Monday morning, with sterling rising to €1.188. Violence erupted across France after weeks of peaceful demonstrations over conditions in schools and the cost of living.
While tens of thousands of people have attended peaceful marches to demand more teachers and repairs to decrepit schools, different groups have clashed with police in cities including Paris, Bordeaux, Nice and Marseille. Jim Reid of Deutsche Bank said the protests “won’t make it easy for the international community to be totally comfortable buying OATs [French government bonds]”. He said: “With France already facing a difficult fiscal backdrop and the 2027 election approaching, the weekend adds another layer of political risk for markets.” The 30-year bond, which is a benchmark for the French government’s long-term cost of borrowing, rose by five basis points to 5.42%.
The rise in borrowing costs will add further strain to France’s public finances, as the government also tries to pass a budget for next year to rein in its deficit. France’s debt-to-GDP stood at 115.6% in 2025, while its budget deficit was 5.1%, compared with 94.3% and 4.3% for the UK respectively. The unrest adds to “concerns about the political and fiscal troubles in France”, said Neil Wilson, Saxo UK’s investor strategist.
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