French Bond Yields Rise as Gap With Germany Widens
French government bond yields rose this week. They are near their highest level since 2002.
The sell-off in French debt deepened. Investors sought safety in German bonds called Bunds.
Their yields fell this week. Bonds from the US and Europe also sold off over inflation fears.
Investors wanted the biggest extra yield to hold French bonds. That gap is the widest since the 2012 regional debt crisis.
The gap shows worry about France's public finances. Germany's finances are seen as stronger.
Reports cite French money and political strains. A budget plan failed to reassure investors.
Reports also cite higher energy prices and wider inflation fears. Reports say there are signs of trouble spreading to Italy.
Klear Note — Bunds are German government bonds. A yield premium is extra interest investors demand for taking greater risk.
Key Terms 3
- Bunds Government bonds issued by Germany. Investors see them as very safe.
- Bond yield The return an investor earns for holding a bond. Higher yields mean higher borrowing costs.
- Sell-off When many investors sell at once. This pushes prices down and yields up.