French 10-year yields rise after budget, German Bund yields climb
Updates prices
By Medha Singh
Oct 11 (Reuters) -French bond yields edged higher onFriday as investors assessed the government's 2025 budget to tackle a spiralling fiscal deficit, while German bond yields hit a freshone-month high.
FrenchPrime Minister Michel Barnier's new government, under pressure from financial markets and France's European Union partners to take action,outlined plans for 60 billion euros ($66 billion) worth of spending cuts and tax hikes on thewealthy and onbig companies.
"The main points were well telegraphed through the media over the past weeks and should hence not take markets by surprise," said Michel Nies, economist at Citi.
"Much of the adjustment burden falls on revenue increases, which will not be easy to achieve in the magnitude that’s pencilled in."
France's 10-year bond yields FR10YT=RR, which move inversely to prices, were up 3 basis points (bps) at 3.058%, hitting a five-week high.
The spread between France's and Germany's 10-year government bond yields DE10FR10=RR stood at 77.5 bps, largely unchanged from a day earlier.
That spread, a gauge of the higher returns investors demand for holding French debt over the European benchmark, has been in focus since it widened sharply in the run-up to France's parliamentary election earlier in the year.
The government had previously said the budget bill would reduce the public deficit to 5% of gross domestic product (GDP) next year from 6.1% this year as a first step towards bringing the shortfall into line with an EU limit of 3% in 2029.
Goldman Sachs economists wrote in a note that the scale of the proposed consolidation and the corresponding reliance on tax increases left them less confident about the government's ability to meet its 2025 deficit target.
Fitch's review ofFrance's rating due later on Friday will be a focus of investors' attention, though markets see a bigger risk of a downgrade when Moody's updates its stance on Oct. 25.
All three major ratings agencies, which also include S&P Global, currently have a stable outlook in place, but this might become increasingly difficult to justify, Citi's Nies said.
Meanwhile, the euro zone benchmark German10-year bond yield DE10YT=RR gained 3 bps at 2.28%, after rising to 2.299%, its highest since early September.
In the absence of major domestic economic catalysts, signs of a strong U.S. economy and the prospect of U.S. rates remaining higher for longer have recently been driving euro zone yields, pushing them to multi-week highs.
U.S. Treasury yields ticked lower early on Friday after a report showed producer prices were flat in September.
The European Central Bank's Oct. 17 meeting is now expected to take centre stage, with money markets almost fully pricing in a 25 bps rate cut.
Germany's two-year bondyield DE2YT=RR, which is more sensitive to ECB rate expectations, was up 3 bps at 2.26%.
Elsewhere, Italy's 10-year government bond yield IT10YT=RR firmed 3 bps to 3.57%. The country's borrowing costs were slightly up at an auction .
Reporting by Medha Singh in Bengaluru; Editing by Kim Coghill and Gareth Jones
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
