London | Brisbane. 6 October 2026. For immediate release.
Emmanuel Moulin, the governor of the Banque de France, says France can still reassure bond investors despite ‘serious and worrying’ market moves in recent days
“If we don’t act, there is indeed a risk of being gradually strangled by rising interest rates,” he added. “We have to remain masters of our own destiny.”
It is a clear plea to the ECB to stop raising rates. 10 year French yields have risen by 100bps in 2 months and, with 120% debt to GDP, its fiscal situation is dire. But yesterday YoY EU PPI came in at 8.2%, so it’s certain that Madame Lagarde will have to keep on the hiking track until some relief materialises.
Amongst the many problems that France faces is that China exports are killing local industry. In an extremely rare example of agreement with Germany, the two countries have written to the European Commission with far-reaching proposals on how to deal with China’s increasingly intimidating export machine.
And the current protests and riots in France are driven by widespread anger among high school and university students over chronic underfunding, deteriorating infrastructure, and a severe shortage of teachers.
A riot in France is a part of normal life but we can’t help thinking that if a sovereign debt crisis is going to eventuate, then markets are looking for the first scapegoat and France could well be it.