French bond market fluctuates sharply, raising concerns about spillover risks of European debt

1. Large-scale youth protests have broken out in many parts of France, accompanied by multiple clashes. The domestic situation has become volatile, causing a sharp drop in the bond market and a rapid rise in risk-averse sentiment. 2. Far-left MP Louis Boyard put forward related relief proposals last week. At 26 years old, he directly confronted Education Minister Édouard Geoffroy during parliamentary debates, bluntly stating that the government has failed to truly understand the demands of young people and emphasizing that real financial investment is needed to resolve the issues. 3. The protesters' demand for about 10 billion euros (approximately 11.2 billion US dollars) in funding exceeds France's current fiscal capacity and the government finds it difficult to satisfy. 4. In recent years, France has continually increased fiscal spending to respond to multiple crises. As the second-largest economy in the EU, its debt level has surged and debt servicing costs remain high, which has continuously undermined investor confidence in its debt management capabilities. 5. Recently, a wave of bond-market selloffs pushed France's financing costs to their highest in nearly 25 years. Last Friday, the yield spread between French 10-year bonds and Italian bonds reached a record high, intensifying market concerns about the risk of European debt contagion.