French 10-Year Yield Spread Hits 2011 High as ECB Weighs TPI Response
Updated
Updated · Bloomberg · Oct 8
French 10-Year Yield Spread Hits 2011 High as ECB Weighs TPI Response
3 articles · Updated · Bloomberg · Oct 8
Summary
French bond turmoil has shifted focus to whether the European Central Bank will deploy its Transmission Protection Instrument, a backstop designed to counter disorderly jumps in borrowing costs.
France’s large budget deficit drove the selloff, pushing the extra yield on 10-year French bonds over Germany’s to its widest level since 2011.
Pressure has spread beyond France to other heavily indebted euro-area issuers, including Italy, Greece and Belgium, reviving memories of the 2009-2015 sovereign debt crisis.
Any ECB response now matters beyond France because a sustained rise in peripheral borrowing costs could test euro-area market stability and fiscal credibility.