The French 10-year rate is positive again

Posted on Sep 7, 2021 at 6:24 PMUpdated Sep 7, 2021, 6:58 PM

France will again have to pay to finance itself at 10 years. On Tuesday, the yield on French government bonds of this maturity rose by more than 5 basis points to rise again from the 0% mark to 0.022%. A first since July 16.

For several days now, the French benchmark rate has flirted with this symbolic threshold. The boost was given by a global movement to sell state debt by investors. The 10-year US Treasuries rate also hit its July highs, hitting 1.38%. And that of British gilts is at its highest since June.


This movement of nervousness on the bond market can be explained by a combination of several factors. Starting with fears of a decline in central bank support in the face of an economic recovery that is taking shape and inflation that does not seem to be slowing down. The Bank of Australia has announced that it will stop intervening in the market. According to traders, his New Zealand counterpart, which already ended its asset purchase program in June, is preparing to raise rates at its next meeting.

For its part, the US Federal Reserve confirmed at the end of August, in Jackson Hole, a tapering (the gradual end of its purchases) this year. Although the disappointing employment figures could delay the trigger for her withdrawal a bit, she should not reverse her decision.

ECB meeting

It is in this turbulent context that the European Central Bank’s monetary policy meeting will be held on Thursday. The latter should maintain or very slightly reduce the pace of its “pandemic emergency” program (PEPP), but the markets will watch for any indication of the end of this program scheduled for next March.

Especially since the oppositions between partisans of a still strong support for the economy and defenders of a rapid return to normal are more and more apparent. The possible mention of tapering by the ECB could even put pressure on the Fed in terms of timing.

These prospects of closing the liquidity tap by central banks come at a time when the week is particularly busy in terms of government debt issuance. The US Treasury must raise more than 120 billion euros in debt in the coming days.

In Europe, Germany and Austria have also sought the markets. Spain issued its first sovereign green bond, for an amount of 5 billion euros, on Tuesday. Contrary to a recent trend, which saw the issuance rate of a green government bond be slightly lower than that of a traditional bond, Madrid had to offer investors a premium. Another sign of the nervousness of bond managers.

Leave a Reply

Your email address will not be published. Required fields are marked *