French government bond yields have reached their highest levels in nearly two decades, with the 10-year OAT (French government bond) rising to 4.3069% on Wednesday, September 9—up 8.5 basis points. This level was last seen during the global financial crisis in late 2008. Similarly, the 30-year French bond yield climbed over 6 basis points to 5.04%, crossing the 5% threshold for the first time since 2008. Meanwhile, in Germany, the 10-year Bund yield increased by 6 basis points to 3.4183%, reaching its highest level since April 2011. The yield spread between French and German 10-year bonds reached nearly 90 basis points during the day, reflecting growing concerns about France’s financial stability compared to Germany. Rising global bond yields are part of a broader trend driven by higher oil prices and fears of increasing inflation, which have created uncertainty in financial markets. Investors are particularly concerned about France’s fiscal outlook, especially with the upcoming autumn budget debate. The country already has one of the highest public debt levels in the eurozone, and fears are growing that this could worsen before the 2027 presidential election. Kevin Thozet, a member of the investment committee at Carmignac, highlighted that France is especially vulnerable to rising interest rates due to its large budget deficit. He called the current budget starting point "unfavorable," noting that achieving a 3% deficit by 2029 would require about 85 billion euros in adjustments compared to the current path. The situation reflects a broader global concern over sovereign debt and financial risk. Countries are grappling with high deficits, political instability, and the influence of populist movements, all of which contribute to uncertainty in bond markets. These factors make it more difficult for governments to borrow money at lower interest rates, increasing the cost of financing public debt. As a result, investors are closely watching the fiscal policies of major economies, including France, for signs of stability or further deterioration. The current environment of rising yields and inflationary pressures has made it more expensive for governments to issue new debt, putting pressure on public finances. In France, this is compounded by the need to address long-term fiscal challenges, such as an aging population and rising public spending. With the 2027 election on the horizon, political decisions about budget cuts or tax increases could significantly impact the country’s economic outlook. As a result, the bond market is reacting to these uncertainties, with yields continuing to climb as investors seek safer returns elsewhere.