x01a Research Archives

Investors sold off French government bonds after a weekend of violent protests, pushing the yield on the country’s 10-year debt as high as 4.94 percent on Monday and widening the premium over German bonds toward levels last seen during the eurozone debt crisis.

With some of the most violent images of the protest involving predominately migrant youths, the social unrest crisis and decades of mass immigration could actually lead to a debt crisis as well.

The sell-off followed days of unrest over the cost of living and conditions in schools that turned into riots, with thousands of arrests, looted shops and damaged public buildings across France, according to French news outlet BFMTV.

Yields rise when bond prices fall, and the jump in French borrowing costs reflected investor concern that the disorder would make it harder for the government to reduce its large deficit and debt.

The gap between French and German 10-year yields, a key measure of the risk premium on French debt, widened sharply and approached or reached its highest level since 2012, according to market data. fSome accounts put the French 10-year yield’s rise at as much as 16 basis points on the day, leaving it near multi-decade highs.

The riots and looting across France might have been supported by leftist radicals, but National Rally leader Marine Le Pen stands to be the greatest beneficiary when the dust eventually settles.

Protesters, many of whom have been seen carrying Palestinian flags, have set fire to historic buildings and attacked civilians. Le Pen’s already insurgent brand of nationalist, law-and-order politics is finding little meaningful opposition from the left or center.

Paris police imposed an overnight curfew on Monday in two areas of the capital, after a weekend of some of France’s worst rioting in years.

People may not enter or stay in Place de la Republique or the Les Halles shopping district from 11pm until 6am on Tuesday. Gatherings and demonstrations are barred from 8pm.

On Monday evening, police guarded the two spots and asked passers-by to take other routes.

Some people had their identity papers checked. A helicopter with a searchlight passed over Les Halles several times, and the streets stayed quiet.

The prime minister had earlier asked prefects to impose ‘very limited’ and ‘localized’ curfews to prevent more looting.