France Sells 10-Year Bonds With Highest Yield Since Election

France paid the most to borrow for 10 years since President Francois Hollande was elected, on prospects the economic recovery that began in the second quarter will strengthen further.

The treasury sold 4.24 billion euros ($5.59 billion) of 2023 debt at an average yield of 2.57 percent, the highest at any auction since May 2012. It also sold 2.49 billion euros in 2021 securities at an average yield of 2.17 percent -- more than 1.42 percent on May 2 -- and 1.66 billion euros 2045 debt at 3.6 percent.

The higher yields reflect expectations growth is picking up in the euro area after the region exited its longest recession in the second quarter. Euro-area services and factory output expanded for a second month in August, according data published yesterday by Markit Economics. The composite purchasing managers index rose to 51.7, its highest since June 11.

The data suggests that “the euro-zone economy has continued to expand in the third quarter,” said Jonathan Loynes, chief economist at Capital Economics in London.

France auctioned 10-year bonds at a yield of 1.81 percent on May 2 this year, a record low.

European Central Bank President Mario Draghi will discuss his outlook for the European economy and rates starting at 1:30 p.m. in Frankfurt today.

French 10-year bonds yielded 2.58 percent as of 11.20 a.m. in Paris. The spread with comparable German debt was 59.6 basis points.

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