French bond yields hit highest since 2002 as borrowing costs surge

Spread with German debt widens to widest since 2012

The Guardian’s live business coverage on October 2 opened with a note that turmoil in the government bond market is “reviving memories of the eurozone debt crisis 15 years ago” but that “this time France is in the firing line.”

The yield on French 10-year government bonds, known as OATs, climbed to its highest level since 2002 on October 1, 2026, before easing back as the broader bond rout moderated through the trading session. The move pushed the gap between French and German 10-year borrowing costs to its widest level since 2012, a key measure of investor concern.

The Guardian reported that investors are reluctant to acquire French government bonds due to political uncertainty, with presidential elections scheduled for 2027, and concerns over France’s public debt, which has climbed to a record high.

Jim Reid, a strategist at Deutsche Bank, noted that the Franco-German 10-year spread jumped 13.9 basis points on October 1, its biggest daily move since March 2020 at the height of the Covid-19 market turmoil. Reid told clients on the morning of October 2 that the daily moves in bond markets on October 1 were “reminiscent of the Euro crisis in many respects, with sovereign contagion a big talking point.”

The French government proposes spending cuts and tax increases, according to the Guardian, as the country’s public debt climbs to a record high. Investors are weighing the fiscal plans against political uncertainty, with presidential elections scheduled for 2027.

Inflation fears are pushing up bond yields across major economies. The yield on US 10-year Treasury bonds stood at 5.29% on October 2, 2026, according to Federal Reserve data.

Investors are watching for eurozone flash inflation data for September, due at 10am BST on October 2, which could influence European Central Bank policy expectations. The US September non-farm payrolls employment report, scheduled for release at 1:30pm BST on October 2, is also weighing on market sentiment. A stronger-than-expected reading could intensify pressure on the Federal Reserve to consider raising interest rates, which would further stress bond markets.

Other data due on October 2 includes the UN Food and Agriculture Organization’s Food Price Index at 9am BST, and the US factory orders report for August at 3pm BST.