Live Markets: French stocks face headwind from high bond spreads, Barclays says

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21/08/2026 10:24

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FRENCH STOCKS FACE HEADWIND FROM HIGH BOND SPREADS, BARCLAYS SAYS
While much of the attention this week has been on the U.S. bond market, it's the bond market of the euro zone's second biggest economy that is grabbing the attention of Barclays equity strategists. 
Bond yields in France have risen at a faster pace than their peers in recent weeks, pushing the spread between German and French 10-year yields to around 85 basis points. 
Not only that, but French bonds are also underperforming the traditionally more indebted countries of the euro zone too, with French borrowing costs higher than those in Spain and Italy. Yields rise when bond prices fall. 
That's led to an underperformance in domestic French equities, notes Barclays. 
And on Friday, France's five-year credit default swaps, essentially protection against a default, rose to their highest since late March. 
"While much of the bad news is arguably reflected in valuations, heightened fiscal and political uncertainty in France is unlikely to fade quickly," Barclays writes. 
"With budget negotiations and elections set to keep scrutiny on France elevated over the coming months, OAT spreads may remain high, thus continuing to act as a headwind for domestically exposed French stocks, in our view."
(Samuel Indyk)
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EARLIER ON LIVE MARKETS:
STOXX SET TO SNAP LOSING STREAK CLICK HERE
EUROPE BEFORE THE BELL: STOCKS HEADING FOR WEEKLY DROP CLICK HERE
SO MUCH FOR THE BESSENT BID CLICK HERE