Euro Zone Bond Yields Rise as French Borrowing Costs Hit 24-Year High
LONDON, Oct 21 (Reuters) - Euro zone bond yields increased on Wednesday, driven by a surge in French borrowing costs to their highest level since mid-2002. The rise in yields was fueled by widespread French protests, which added to concerns over the country's fragile finances and political uncertainty. The protests also contributed to a rebound in crude oil prices, which rose above $110 a barrel after a brief retreat the previous day.
French 10-year OAT yields reached 5% for the first time since July, increasing by 8 basis points on the day and more than 20 basis points this week. This marked the sharpest weekly increase among major bond markets, where yields rose by an average of 5.7 basis points, according to LSEG data. The premium on French yields over benchmark 10-year Bunds also edged back towards its early October high of nearly 160 basis points.
Italian bonds fared relatively better, with 10-year yields rising by only 12 basis points this week. The Italian-German 10-year yield spread widened by 4 basis points to 116 basis points, while Italian 10-year yields rose to 4.6047%. German 10-year yields were up 3.4 basis points at 3.4274%, with two-year yields rising 4 basis points to 3.0940%.
