Patrick Boyle On Finance The French Bond Market Is on Fire
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Oct 11, 2026 France’s borrowing costs have surged past those of Italy and Greece, exposing deep fiscal and political strains. The discussion explores the global bond selloff, AI-driven borrowing, energy shocks, France’s deficit, and why Italy appears more credible despite heavier debt. It also examines election proposals, the ECB’s limited rescue options, and how the euro turns a potential currency crisis into a prolonged squeeze.
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Why France Now Borrows More Than Greece
- French government bonds now yield more than debt from L’Oréal, Italy, and Greece, signaling an unusual collapse in perceived sovereign safety.
- Corporate bonds yielding less than France surged from €12 billion to €215 billion, or 38% of comparable high-grade issuance.
AI Spending Is Crowding Out Governments
- Global borrowing costs rose as hyperscalers competed with governments for savings and oil inflation pushed central banks toward tighter policy.
- France is especially exposed because borrowing costs exceed nominal growth, making debt rise faster than national income without fiscal adjustment.
France’s Fiscal Gap Keeps Expanding
- Independent economists project France’s deficit reaching 6.8% of GDP and debt exceeding 130% by 2030 under current policies.
- Required annual savings have risen from €125 billion to roughly €140 billion as ten-year yields climbed from 3.7% to 4.9%.