French bonds are suffering through their worst decade since 1803 — and investors are bracing for more pain

France's 10-year government bonds have just closed their worst decade since 1803, according to the report, with the yield spread over equivalent German Bunds reaching its widest level last week in Bloomberg data going back to 1990. Persistent budget deficits and political fragmentation have eroded the risk premium investors once attached to French debt, and the market is pricing that deterioration through the spread rather than through absolute yields alone.

The spread matters because it is the cleanest gauge of relative credit risk inside the euro area. When it widens, it signals that investors demand more compensation to hold French paper over German paper — a shift that can raise borrowing costs for the French state, its banks, and its corporates, since sovereign yields anchor domestic funding benchmarks.

What to watch: the trajectory of the deficit and any credible consolidation plan, the outcome of French political negotiations, and whether the widening stabilizes or accelerates. Broader euro-area spread dynamics and European Central Bank policy also matter, since a wider French spread can test confidence in the currency bloc's cohesion.