The French Are Popping The Bubbly Right Now

In the last few days, the difference between the yields on French bonds and German bunds has been shooting through the roof and everyone has started to freak out about France.

Fast forward to today and that fear is nowhere to be found.

The French-German 10 year bonds to bunds spread is tanking today, down by over 8%.

This positivity could owe to the approval of new austerity measures in Italy as part of the 2012 budget and S&P’s denial of a rumour that France had been downgraded. Even so, France still faces significant hurdles ahead.

The falling spread this morning has erased much of its more than 12% gain yesterday:

Photo: Bloomberg

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