Key Highlights

● France's 10-year yield rose above the US 10-year for the first time since 2013.

● The French-German yield spread hit its widest since 2011.

● German Bunds had their largest drop in yields since May 2025.

● The yen and Swiss franc were the top gainers among major currencies.

For more than a decade, the US government paid more to borrow for 10 years than France did. On Thursday, October 22, that changed. France's 10-year yield rose above the US 10-year for the first time since 2013.

The crossover came from both sides of the Atlantic: US yields tumbled as investors piled into Treasuries, while French debt stayed under pressure amid domestic unrest and heavy government borrowing.

The US side: a flight to Treasuries

Treasuries staged a powerful rally. The 10-year yield closed back below a closely watched threshold for the first time since September 22 and posted its biggest one-day decline in more than a year, though sources differed on exactly how far back the comparison runs.

The driver was a stock-market scare over artificial-intelligence spending. Meta Platforms (NASDAQ:META) laid out heavy capital spending plans and negative free cash flow, and Lam Research (NASDAQ:LRCX) cited supply constraints. "Treasuries rallied overnight as tech stocks came under pressure amid renewed AI valuation fears," a rates strategist said.

The Nasdaq Composite fell 694 points to 26,008.86, and the S&P 500 dropped 93.74 points to 7,663.43, its worst day since July.

The French side: politics and debt

France's problems are homegrown. The country faces political unrest and government debt that exceeds its annual economic output. The spread between French and German 10-year yields hit its widest since 2011, a sign that investors are demanding a growing premium to hold French paper rather than German Bunds.

German debt, by contrast, rallied alongside Treasuries. Bunds had their largest drop in yields since May 2025.

"With elections not for another six months, France's bond market could remain a source of volatility," one strategist said.

European stocks also struggled. The region posted its biggest drop in three weeks, and France's CAC 40 fell on the day.

Why the milestone matters

The US has long been seen as a higher-yielding market than the core of Europe, reflecting stronger growth and, more recently, higher inflation and interest rates. The Federal Reserve raised rates in September, and markets still price about one more hike before year-end.

So a French yield above the US rate is a striking signal about how investors view French fiscal risk. It also shows how quickly the safe-haven bid can shift toward Treasuries when US stocks wobble. Earlier this month, on October 7, the US 10-year had hit its highest level since April 2002, before Thursday's sharp reversal.

The currency market echoed the caution. The yen and the Swiss franc were the top gainers among major currencies, while the dollar index was roughly flat.

Oil complicated the picture. Brent crude rose to $113.17, its highest since May 4, after Houthi attacks in Saudi Arabia. Higher energy costs typically pressure bond markets, but on Thursday the flight to safety in Treasuries outweighed that concern.

Will the French-US yield flip last?

The crossover may not last if the Treasury rally fades. The Fed, led by Chair Kevin Warsh, announces its next decision on Wednesday, October 28, and third-quarter US GDP and September PCE inflation follow on October 29. Friday's S&P Global PMIs will offer fresh readings on both US and European activity.

In France, investors will watch for any political developments ahead of elections that are still about six months away, and whether the gap with German yields keeps widening.