Institution: In extreme scenarios, the spread between 10-year French and German government bonds could widen to 150 to 300 basis points.

智通财经2026/10/01 08:36

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According to Cedric Gemehl, an economist at the research firm Gavekal, as the presidential election approaches next year, under extreme scenarios, the spread between French 10-year government bonds and German 10-year government bonds could widen to 150 to 300 basis points.
In recent months, an energy shock has raised expectations of interest rate hikes. Coupled with heightened market concerns over France's political and fiscal outlook, the spread between French and German government bonds has significantly widened.
Gemehl has outlined three possible paths for the further evolution of this spread.
Given that France's fiscal situation is unlikely to see substantial improvement, the likelihood of the spread narrowing significantly is low.
If "there are clear signs that the French government intends to reject the political and fiscal conditions attached to eurozone assistance, causing the eurozone backstop mechanism to no longer constrain the spread," then a "eurozone debt crisis-style surge in the spread" could occur.

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Institution: In extreme scenarios, the spread between 10-year French and German government bonds could widen to 150 to 300 basis points.

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