The yield gap between French and German 30-year government bonds widened to 170.5 basis points on Oct. 20, sharpening focus on France’s long-term borrowing costs ahead of its 2027 budget debate.
Investing.com historical tables put the gap at 165.4 basis points on Oct. 19. A day later, French 30-year debt yielded 5.461%, compared with 3.756% for comparable German bonds. A basis point is 0.01 percentage point.
The Oct. 20 gap was about 160 basis points for 20-year debt and 153 basis points for 10-year debt. Brookings Institution senior fellow Robin J Brooks argues that the wider gaps at longer maturities make the commonly cited 10-year measure an incomplete gauge of pressure on French bonds.
In an Oct. 20 post, Brooks said he saw a high likelihood that the 30-year gap would reach 250 basis points before year-end. He assigned a 30% probability to a French debt crisis and expects the European Central Bank (ECB) to intervene if the gap reaches that level. Those are Brooks’s assessments, rather than announced ECB policy.
Brooks cited the ECB’s 2022 response to rising Italian and Spanish bond yields as a precedent. The central bank introduced its Transmission Protection Instrument that year, but its published terms set no spread threshold for using it. A decision would involve an assessment of market conditions, indicators of how monetary policy is reaching the economy, eligibility and proportionality.
Public-sector purchases under the instrument focus on securities with one to 10 years remaining. The 30-year gap in Brooks’s forecast therefore does not, by itself, trigger the instrument under the ECB’s stated terms.
France’s National Assembly has scheduled debate on the second, spending portion of the 2027 budget bill to begin Oct. 27, following an earlier rise in French bond yields. The ECB’s next monetary policy meeting is set for Oct. 28–29, with a press conference on Oct. 29.
