Reuters reports renewed selling of French government debt alongside pressure on the euro, with investors demanding a higher relative return to hold France’s bonds.
A sharp sell-off in French government bonds has pushed France’s sovereign risk premium to levels last seen during the 2011 euro-area sovereign debt crisis, Reuters reported on October 23 in a report carried by CNA.
The premium is the extra yield, or return, investors demand on a government’s debt relative to a benchmark. Its rise means investors require a higher relative return to hold French bonds. Reuters gave neither a numerical spread nor a closing reading for the premium.
The euro was down 0.15% at $1.1200 during Friday trading, an intraday observation rather than a closing price. Reuters also reported that an unexpected contraction in French business activity in October weighed on the currency.
Japan’s yen had jumped on Thursday after being roughly unchanged earlier in the week. Reuters attributed the move to investors seeking safety amid fragile stock markets and concerns about France’s public finances and possible renewed street riots.
French concerns were not the only backdrop to that demand. Reuters also linked buying of the yen as a safe haven—a currency investors turn to for protection—to a sell-off in stocks tied to artificial intelligence.
The European Central Bank’s next policy decision is due on Thursday. Reuters reported that investors expected the bank to leave interest rates unchanged and would watch for signals about future rates.
Backed by the right and centre after the October 17 violence, the proposal would widen who can be made to pay and which benefits can be seized. It now goes to the National Assembly.
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