French 10-year bond yields briefly rose above Greek 10-year yields. Greece, if you remember, was Ground Zero of the eurozone crisis of 2010 to 2014. Here is the chart:
In June, President Macron called snap elections for the National Assembly which resulted in the left having a third of the seats, the centre having a third and the right having a third. The three blocs hate each other, so there is no prospect of a coalition government. And fresh elections can't be called till June 2025.
Amidst this mess, the French Assembly has been trying to agree a budget. They've been labouring on it since September. All sorts of proposals have been tabled and dismissed. Nothing looks like it can win the vote of 51% of the Assembly to pass.
The markets are starting to get antsy. In the last decade, the markets have divided eurozone countries into safe (Germany, Netherlands, Luxembourg, Ireland, Belgium France) and risky (all the rest).
It looks like France is being moved to the risky category, which means it will pay higher interest.
As you can see from the graph, French yields are far from crisis levels. But the sharks are circling, and when they pounce, yields can shoot up very quickly. And then they're in the territory of an IMF loan, with all the misery that entails.
The European Central Bank could bail them out by printing money and using it to buy French bonds. But the ECB hasn't yet vanquished inflation, and printing money is inflationary.
