France's Bond Market in Turmoil Amid Political Unrest

Investors demanded a higher risk premium for French government debt as political tensions rose. The National Rally party threatened to topple the government, affecting bond yields. French 10-year bond yields briefly surpassed Greece's, while German bond yields dropped as investors sought safer options.

The financial market witnessed a surge in the risk premium for French government debt as political unrest brewed on Monday. The National Rally party expressed readiness to challenge the government, triggering heightened volatility in bond yields.

France's 10-year bond yield momentarily exceeded Greece's, marking a historical first, as the political friction intensified during ongoing budget disputes. Meanwhile, Germany's bond market saw a dip in yields, reflecting investor preference for safer assets amidst uncertainty.

In contrast, Italy's 10-year yield remained mostly stable at 3.28%, though the yield gap with German yields widened. Germany's two-year bond yields were equally affected, dropping 3 basis points, influenced by expectations surrounding the European Central Bank's rate policies.

(With inputs from agencies.)