The selling pressure on French sovereign debt extended to longer-dated maturities on Oct. 1, driving the 30 year yield to a level not seen in over two decades. This broadening rout follows a surge in the 10 year yield premium over German bonds, which hit 124 basis points on Sept. 30, the widest gap since 2012. Borrowing costs for Paris have now surpassed those of Italy in an unprecedented reversal for the euro era, with French notes yielding 22 basis points more than Italian debt.

Political instability and accelerating inflation are pressuring the debt market as the government projects a budget deficit of 5.4% of GDP this year. France is preparing a record €340 billion bond issuance in 2027 to manage its financing. The volatility has shifted sentiment toward corporate credits, with some blue-chip companies including LVMH now borrowing at lower rates than the French state.