The yield on 10-year French debt rose nine basis points to 3.51%, leading global bond market losses. The nation’s borrowing premium over Germany widened by five basis points to close at 75 basis points, the most since April and up from 65 in late July.
France’s 10-year yields are now among the highest in the bloc, having already surpassed countries once at the heart of the European sovereign debt crisis such as Greece and Portugal…
“Those investors who bought Europe on the belief that Germany somewhat represented the potential of the euro zone made a mistake,” Vincent Juvyns, chief investment strategist at ING in Brussels, said in an interview Tuesday. “It’s a two-tier Europe we have now with some countries like Germany that can afford to spend on growth and those who have no choice but to consolidate their public finances.”
Bayrou is calling the confidence vote in an effort to consolidate support after facing pushback against €44 billion ($51 billion) of spending cuts and tax increases that he considers vital to avert disaster for France’s public finances. He also proposed abolishing two of France’s public holidays, drawing scorn from the opposition.
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