How the French bond drama affects U.S. markets

Data: FactSet; Chart: Neil Irwin/AxiosThe unrelenting sell-off in French bonds continues. The latest move shows how that nation's precarious fiscal and political situation could spill over elsewhere — including offering relief for U.S. borrowing costs.The big picture: U.S. Treasury yields have fallen in the last couple of weeks, while French borrowing costs have surged. Borrowing costs are also down in other traditional safe-haven nations.This may partly reflect investors seeking alternatives to French bonds, alongside a broader safe-haven effect as there have been new wobbles in AI-related debt markets.Driving the news: The effect is particularly pronounced in Thursday's trading. As of 11:30am ET, 10-year French government bond yields were up another 0.08 percentage point, to 5.07%, a new 24-year high.Yields on the 10-year U.S. Treasury, meanwhile, were down 0.12 point, to 5.02%, the lowest since Sept. 22. That rate reached 5.31%, a multidecade high, just over two weeks ago on Oct. 5.Sovereign bond yields are also down sharply Thursday for Germany, Canada and Switzerland.State of play: The overall action in financial markets Thursday fits a classic "risk-off" pattern, with global…

≈