What is the level of France's risk premium that is dragging down all of Europe
Analysts are starting to talk about the contagion spreading to the debt of other countries like Spain and to the euro.
Analysts are warning of a potential contagion effect on other European countries, including Spain, and the euro, due to the recent surge in French public bond yields. Goldman Sachs strategists note that the vulnerability of the euro to stress in the sovereign debt market still exists, with French bonds being a clear point of contagion to peripheral debt since October 1.
The bank estimates that the euro depreciates by 6% against the dollar for every 100 basis points increase in European debt costs. The European Central Bank may face pressure to intervene to prevent excessive euro weakness, with possible options including changing its language to calm markets, reducing its bond holdings, or using its Transmission Protection Instrument.
Written by urgent.news from Expansion ES's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
