France is being yelled at from both sides. Bond investors want austerity. Rioters want more spending. The government is the guy in the middle of a bar fight holding a calculator.
The 10-year OAT briefly touched 5.002% on Wednesday. First time since 2002. That's 24 years. Some of you reading this have never owned a pair of pants older than that number.
Prime Minister Sebastien Lecornu wants spending cuts. Parliament is divided. Nobody has a majority. The budget is a hostage negotiation where every hostage is also a negotiator.
Outside, protesters demand more money for education and relief from the cost of living. Violent protests. Rioting. Over the weekend. Nothing says "fund our schools" like setting a bus on fire.
Moody's decides on France's credit rating Friday. Most economists expect a downgrade. France will find out how it did on its report card from a company that also got a bunch of mortgage bonds wrong once.
Here is what the chart says. Yield goes up. Price goes down. That's it. That's the whole analysis. Thirty years of experience and I charge nothing for it.
The spread over German bunds hit roughly 159 basis points. Germany sits there, quiet and punctual, being the friend who always pays back the twenty.
Every retail trader reading this just opened a YouTube video titled "FRANCE BOND CRASH: HOW I PROFIT." You will buy a leveraged bond ETF you cannot pronounce. You will hold it through Friday. You will call it conviction.
France spent two decades promising to fix its finances. It kept the promise the way you keep a gym membership.
The bond market gave France a 5% interest rate. It's the first time in 24 years France has been charged this much for a loan, and the French responded by setting fire to their own country, which is technically collateral.
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