France Now Pays More to Borrow Than America. Why, and Why It Matters Beyond Paris

On Thursday, investors began charging the French government more to borrow for ten years than they charge the United States. That has not happened since 2013. If you own European shares, a bond fund or anything priced in euros, here is what happened and why it is worth understanding.

What happened

France borrows by selling bonds called OATs (obligations assimilables du Trésor). The yield is the yearly return investors demand to hold them, so a higher yield means a higher cost of borrowing for France. The Guardian, the British newspaper, reported that the French 10-year yield rose nine basis points to 5.089% in early trading on Thursday, which it called "its highest level since July 2022". The same article says the yield "broke across the 5% threshold on Wednesday for the first time since 2002" (The Guardian). That took it above the US 10-year yield for the first time since 2013 (same source).

Reuters, the news agency, reported that the French yield touched 5.1415% during the day, its highest since July 2002, and later stood at 5.06% (Reuters via Investing.com).

The part most headlines miss: US yields fell

The crossover was not only about France. On the same day, the US 10-year yield fell about 15 basis points (0.15 percentage points) to 4.994%, below 5% for the first time since 23 September, Reuters reported (Reuters via Investing.com, global markets). Investors bought US government bonds as a safe place to park money while technology shares fell on worries about artificial intelligence spending (same source). So France's cost of borrowing rose while America's dropped, and the two lines crossed.

10-year government bond yields, Thursday

France

5.06%

United States

4.994%

Germany

3.34%

percent, axis from zero

10-year government bond yields, Thursday

Item	percent, axis from zero
France	5.06%
United States	4.994%
Germany	3.34%

Why France is paying more

Three reasons stand out in the reporting.

• A stuck budget. The government is struggling to pass next year's budget, and parliament has blocked President Emmanuel Macron's plan to raise the pension age from 62 to 64 (The Guardian).
• Large debts. France's budget deficit was 5.1% of its economic output in 2025, and its debt stood at 115.6% of output (same source).
• Unrest. Protests turned violent last weekend, with nearly 2,400 arrests, according to the interior ministry (same source). Ministers have promised a much larger security operation for more protests planned on Saturday, with troops expected alongside police (Reuters via Investing.com).

Reuters also links the selloff to political uncertainty ahead of next year's presidential election (same source).

The number to watch: the gap over Germany

Germany is the euro area's safest borrower, so traders measure other countries by how much more they pay than Germany. This gap is called the spread. France's 10-year spread over German bonds widened to 177.7 basis points, or about 1.78 percentage points, its widest since November 2011, during the euro zone debt crisis (same source). Germany's own 10-year yield fell to 3.34% as investors sought safety (same source).

Extra cost over Germany's 10-year bond

France

177.7

Italy

123

Belgium

110

Greece

106

Spain

70

basis points (100 = 1 percentage point)

Extra cost over Germany's 10-year bond

Item	basis points (100 = 1 percentage point)
France	177.7
Italy	123
Belgium	110
Greece	106
Spain	70

Other countries moved too. Belgium's spread widened to 110 basis points, its highest since 2012, Italy's to 123, Spain's to 70 and Greece's to 106 (same source). Deutsche Bank strategist Jim Reid told the Guardian the French selloff was "starting to ripple out to other countries" (The Guardian).

Will the European Central Bank step in?

The European Central Bank (ECB) sets interest rates for the euro area and can, in theory, buy a country's bonds to calm markets. Nomura economist Andrzej Szczepaniak told Reuters "the bar for the ECB to intervene is very high" (Reuters via Investing.com). The ECB raised its key rate to 2.5% in September, and ING economist Carsten Brzeski expects it to stay on hold at next week's meeting (The Guardian). Money markets still expect the ECB deposit rate to reach about 3.15% by the end of 2027 (Reuters via Investing.com).

Why it matters if you do not live in France

• Bond funds. Many European and global bond funds hold French government debt. When yields rise, the price of existing bonds falls.
• The euro. The euro slipped 0.3% to about $1.12 on Thursday (Reuters via Investing.com, global markets).
• Rates everywhere. High government yields raise borrowing costs for companies and households, and they compete with other investments. We covered how high yields have weighed on another asset in why gold keeps slipping.

What to watch next

This week and next

1. WednesdayFrench 10-year yield breaks above 5% for the first time since 2002
2. Thursday5.089% in early trading, a high of 5.1415%, then 5.06%
3. SaturdayMore protests planned
4. Next week, date not foundECB rate decision

This week and next

Date	Event	Status
Wednesday	French 10-year yield breaks above 5% for the first time since 2002	Done
Thursday	5.089% in early trading, a high of 5.1415%, then 5.06%	Done
Saturday	More protests planned	Ahead
Next week, date not found	ECB rate decision	Ahead

• Saturday's protests and whether the budget moves in parliament.
• The ECB's rate decision next week (The Guardian).
• Whether the US 10-year yield stays below 5%, which would keep France above it even if French yields stop rising.

What we couldn't confirm

• The exact yield at any one moment. The Guardian gave 5.089% in early trading and Reuters gave 5.06% later in the day, after a high of 5.1415%. These are snapshots at different times.
• The Guardian calls Thursday's early 5.089% level "its highest level since July 2022", while Reuters says the intraday high of 5.1415% was the highest since July 2002. Both outlets say the yield crossed 5% this week for the first time since 2002, so the Guardian's 2022 may be a typing error, but we could not check the underlying data ourselves.
• The date of the ECB meeting. Both sources say "next week" without a date we could verify.
• Whether the ECB would act if spreads widen further. No official has said so.

Not financial advice. Bond prices and currencies can move quickly. Do your own research before buying or selling anything.