Euro Zone Bond Yields React as French PM Resigns Amid Political Turmoil
Euro zone bond yields slightly rose after the unexpected resignation of French PM Sébastien Lecornu, intensifying France's political crisis. The yield gap between German and French bonds widened, reflecting increased risk perception. Meanwhile, Japanese bond yields dipped post a smooth debt sale.
In a day marked by political upheaval, euro zone bond yields edged upward as France's Prime Minister Sébastien Lecornu resigned unexpectedly, escalating the political instability in the region's second-largest economy. President Emmanuel Macron has urged Lecornu to engage in critical discussions with political factions to mitigate the crisis.
Sébastien Lecornu's tenure ended abruptly, setting a record for the shortest-lived administration in modern French history. This political shock resonated in the bond markets, where the German 10-year bond yield remained steady at 2.72%, while the French 10-year yield rose to 3.57%, widening the yield gap to 85 basis points, a sign of increased risk premiums on French debt.
Concurrently, Japan's bond market saw a retreat from record highs as a 30-year bond sale was successfully executed, amid speculation that fiscal loosening might occur under Japan's prospective prime minister. This comes as ultra-long bonds in Europe experience similar pressures, with German, French, and Italian 30-year yields all marginally up amidst international economic concerns.
(With inputs from agencies.)
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