French Bond Risk Hits Highest Since Euro Crisis on Budget Battle
- Yield gap over Germany hits 89 basis points, widest since 2012
- Investors are pricing in likelihood that government collapses
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A measure of French bond risk rose to levels last seen during the euro-area debt crisis as a political standoff over the country’s budget threatens to bring down the government.
The premium investors demand to hold 10-year French government bonds over German bonds climbed three basis points to 89 basis points on Wednesday, the highest level since 2012. The potential fall of the current government could still drive it higher — potentially all the way to 100 basis points, or 1 percentage point, according to Citigroup Inc. strategists.