Bond sell-off rocks Europe after France imposes curfew to contain riots
European bond and equity markets were hit by a fresh sell-off on Monday as the French government rolled out curfews to contain explosive riots that have spread across the country. The 10-year yield on French bonds – a direct reflection of the government’s cost to borrow – spiked around 13 basis points to 4.9 per [...]
European bond and equity markets experienced a sell-off on Monday following the implementation of curfews in France to curb riots. The 10-year yield on French bonds rose by 13 basis points to 4.9%, while the spread between French and German 10-year yields widened to its highest level since early 2012. Investors were concerned about the risk of ongoing unrest in France, with Capital Economics chief European economist Andrew Kenningham warning that the crisis could lead to contagion and a potential recession in the euro-zone.
French Prime Minister Sebastien Lecornu ordered partial curfews, blaming the "ultra-left" for the unrest. The unrest erupted over fuel prices and school conditions. European equities suffered, with France's Cac 40 down 1.5%, Germany's DAX down 1.5%, and Amsterdam's AEX down 0.5%. London's FTSE 100 fell 1.2%, with miners and banks leading the decline.
The UK's 10-year gilt yield increased by four basis points, but bond markets remained relatively stable. Analysts noted that the UK was more insulated from the European turmoil, amidst elevated tensions in the oil market due to ongoing conflicts in the Middle East. Brent crude prices surged above $108, driven by a five percent rally last week, with Iran increasing attacks on tankers in the region.
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