The deepening crisis in France pushed the 10-year bond yield to a 24-year peak

Concerns about the country's fragile public finances are causing an increase in sales in bond markets.

Central banks responded to the increase in energy prices by increasing interest rates, which generally increased global bond yields this year.

However, in this period when developed countries were struggling with their growing debt burden, France's borrowing costs rose much faster than its competitors due to the effect of the deepening financial and political crisis in the country.

France's 10-year bond yield tested the 5,002 percent level, with an increase of 8 basis points during the day.

With this move, the difference between France's 10-year bond yield and the 10-year German bond yield, which is considered the indicator of the Eurozone, widened to 157 basis points (about 1.6 percentage points).

Political instability and social events hit the markets

Behind this harsh pricing in the markets is the weakened government's difficulty in passing reforms that will reduce the high budget deficit through the Parliament.

Incidents of looting and violence during peaceful demonstrations against the high cost of living and the education system across France escalated the distrust in the markets.

In addition, increasing political uncertainty ahead of the presidential election to be held in April next year also increases fragility.

The widening of the gap between far-right leader Marine Le Pen and hard-left opposition Jean-Luc Mélenchon over other candidates in the polls is considered by analysts as the most negative scenario in terms of efforts to reduce the budget deficit.

France's borrowing cost, which stood at 3.2 percent in late February, rose as war in the Middle East fueled inflation and weighed on highly debt-burdened economies.

France was the country that suffered the biggest blow in bond markets among the G7 countries.

Moody's credit rating decision

Analysts state that the political tendency to implement any financial discipline policy before the election is weak, and point out that the current risks in the markets may increase.

It is predicted that the possibility of social events continuing may put additional pressure on the French economy, which is under tight financial conditions, political uncertainty and contractionary fiscal policies.

Amid these developments, the markets focused on the decision regarding France, which is expected to be announced on Friday by the credit rating agency Moody's.

Since the country's current credit rating is "Aa3" and its credit rating outlook is "negative", a possible rating downgrade is among the risk scenarios evaluated in the market.