Bond market revolts against French fiscal policy

Data: FactSet; Chart: Courtenay Brown/AxiosFrench borrowing costs are heading unrelentingly upward, making for a slow-moving fiscal debacle in Europe's second-largest economy.Why it matters: It shows the risks for other advanced countries, including the U.S., as they face the combined pressure of large deficits, political resistance to austerity and a wary bond market.Driving the news: The benchmark 10-year French government bond yielded 5.01% as of 11:35am ET — a new post-2002 high.Also Wednesday morning, the spread between French yields and comparable German bunds widened to about 1.6 percentage point, the biggest spread in 15 years, per Bloomberg.Given that the two countries share a currency, central bank and a deeply intertwined economy, it is a sign of bond market revolt against French fiscal policy and worry about its political future.State of play: Riots and looting over the weekend were the latest evidence that any effort to restrain French fiscal deficits could come with extreme political blowback.The events enhanced the market-priced odds of the right-wing National Rally party prevailing in next spring's elections. The party has promised a slew of populist, deficit-busti…

≈