Glenn Walker DipFA’s Post

 Is France the new Greece? The answer is almost certainly not, says Simon Nixon. Greece in 2009 was a pre-modern state that had just revealed a giant hole in its accounts which sent bond yields soaring above 10 per cent, rendering its debt patently unsustainable. France, on the other hand, is one of the world’s richest countries with an effective public administration, a diverse economy, skilled workforce and, even after the latest sell-off, still only faces bond yields of about 3 percent. What’s more, the EU has undertaken wide-ranging reforms of its banking sector and institutional arrangements since the Greek crisis that make a repeat much less likely. Rather than a Greek-style debt crisis, it is this steady evaporation of confidence in Europe’s ability to tackle its challenges that is most dangerous. Last week, I highlighted the risks arising from the extraordinary valuation gap that has now emerged between European and American stock markets. Perhaps rising bond yields will focus minds in Paris. My hunch is that Barnier will get his budget and that his government will limp on for longer than many expect. After all, it is not in Le Pen’s interest to be blamed for triggering a deeper crisis. But that is unlikely to be enough to restore global investor confidence in France or Europe. But, there are three reasons why the situation in France is troubling. Read the article (link in the comments below)

Greek bonds now yield more than French ones. You could argue that that's because France is currently struggling, or: because Greek has made a remarkable recovery. "The driving force behind Greece's remarkable bond market performance is a combination of fiscal discipline, economic reforms, and resilience against high interest rates. Analysts attribute the milestone to sustained fiscal overperformance, with Greece’s primary budget surplus expected to reach 2.4% of GDP this year, surpassing the 2.1% target." https://lnkd.in/gp2bYwFW

Event: French 10-year bond yields hit 3.03%, matching Greece's for the first time. Political Risks: Budget disputes and potential no-confidence votes against Prime Minister Michel Barnier's government increase uncertainty. Market Reaction: French bonds underperform peers, with yields remaining high and significant investor outflows noted. Budget Proposal: €60 billion in cuts and tax hikes aim to reduce the deficit to 5% of GDP by 2025, but opposition demands revisions. Ratings Concerns: S&P’s rating update due; Fitch and Moody’s cite negative outlooks over fiscal challenges. Comparisons: Greece's fiscal reforms have driven bond yield convergence, while France faces reform delays. Investor Shift: International investors are reallocating funds from French to other European bonds. #FranceBonds #BudgetCrisis #PoliticalRisk #PIGSEconomies #InvestorSentiment

During the Greek debt crisis, which lasted for the best part of a decade, defiance of the EU from Athens was ultimately overridden by the threat to expel Greece from the euro — a move that would have destroyed the value of Greek savings. But expelling France from the euro — or the EU itself — is all but inconceivable. The entire European project has been built around the Franco-German couple since the 1950s. It is much more likely that France would stay in the EU and single currency, but act as a spoiler. That would wreck European cohesion and stability, at a time when the EU is struggling to pull together in the face of the threat from Russia.

Sustainability or? An outlook to the Greek debt in the years to come In 2009, Greece’s ballooning budget deficit raised concerns about the sustainability of the country’s debt. This triggered a crisis that lasted almost a decade. It led to three adjustment programmes agreed with the European Commission, the ECB and the International Monetary Fund (IMF), led to the largest sovereign default in history, cost around a quarter of Greek GDP and pushed the unemployment rate to a peak of 28 per cent. In this paper, written by Yiannis Mouzakis for the Friedrich Ebert Foundation, the differences from 2009 until today is outlined together with a presentation of the key macroeconomic variables. https://lnkd.in/dbiXvMRY The paper is a must-read for everyone attempting to understand the background and the core issues defining the outlook for the Greek economy in the years ahead. #greece #grækenland #economics #macroeconomics

France just said, 'France is not Greece' 👀 But here's the thing: Some bond investors aren't so sure. 😅 For the first time last week, investors demanded higher yields to lend to France than to Greece. That's like saying: 'I trust a country that just recovered from a debt crisis over the Eurozone's second-biggest economy!' Crazy, right? 🤔 So, here's what's going on: France's government is trying to push through a budget with €60 billion in tax hikes and spending cuts. But opposition parties are playing hardball. And a no-confidence vote could be around the corner. ⚠️ Investors hate this kind of political drama. Hedge funds are already betting big against French debt. €99 billion big. 🐺 Meanwhile, Greece has been on the rebound. It's got investment-grade credit again, and investors are noticing. But this isn't a total crisis…YET. France's borrowing costs are still manageable. 💸 But the fact that investors even compare France to Greece? That's a red flag. 🚫 If this budget fight drags on, it could shake Europe's financial stability. And let's be real: Markets don't wait for politicians to figure it out. 🙃 So what do you think? Is this a temporary scare? Or could France actually face a debt crisis? Let me know in the comments below! 👇 PS. 🔔 Subscribe to my profile & ♻️ share with your network

France - 𝗔 𝗧𝘂𝗿𝗻𝗶𝗻𝗴 𝗣𝗼𝗶𝗻𝘁 𝗥𝗲𝗱𝗲𝗳𝗶𝗻𝗲𝗱 𝗯𝘆 𝗣𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹 𝗨𝗽𝗵𝗲𝗮𝘃𝗮𝗹 What happens when a nation synonymous with stability stumbles into uncharted territory? December 4, 2024, will be remembered as a defining moment for France. For the first time since 1962, a no-confidence vote ousted the government, plunging the country into political uncertainty. 𝗧𝗵𝗲 𝗖𝗿𝗶𝘀𝗶𝘀 𝗨𝗻𝗳𝗼𝗹𝗱𝗲𝗱 - Government Collapse: Prime Minister Michel Barnier’s administration failed to pass a €60 billion austerity budget aimed at curbing debt, triggering opposition from all sides. - Public Debt at 112% of GDP: At €3.2 trillion, France’s debt levels are unsustainable, raising fiscal red flags. - Market Reaction: Bond yields surged to 3.023%, surpassing Greece’s 3.009%, a symbolic but significant sign of waning investor confidence. 𝗪𝗵𝗮𝘁 𝗛𝗮𝗽𝗽𝗲𝗻𝘀 𝗡𝗲𝘅𝘁? The next government will inherit the same fiscal challenges: - Soaring Borrowing Costs: Higher yields directly increase the cost of financing debt. - Market Skepticism: Restoring investor confidence requires immediate, bold reforms. - Political Instability: Leadership uncertainty further undermines economic recovery efforts. Will this be France’s wake-up call to chart a new fiscal path, or does it mark the beginning of prolonged economic strain?

France’s borrowing costs have risen above those of Greece for the first time. The 10-year yield on French government debt briefly reached 3.02% in early trading on Thursday, crossing above the 3.01% yield demanded by lenders to Greece, before switching back. The crossover reflects an upheaval in the perceived riskiness of Eurozone borrowers and underscores investors’ concern about France’s political and fiscal outlook at a time when Barnier’s minority administration is struggling to push through €60bn of tax increases and spending cuts.

France's brewing political crisis is spilling into financial markets with the country's borrowing costs hitting the same level as debt-ridden Greece's for the first time on record Thursday. The spread — the difference in yield between two bonds — between French 10-year government bond yields and their Greek counterparts was reduced to zero earlier Thursday. The yield on the French 10-year stood at 3.0010% while the same Greek bond stood at 3.030%. Investors demanding the same interest for holding French debt as they would for holding that of peripheral and debt-ridden economy Greece shows the extent of concerns over political turmoil in France as the government, led by Prime Minister Michel Barnier, struggles to get support for its 2025 budget that aims to cut spending and raise taxes to curb France's yawning budget deficit.

French Debt Seen Riskier Than Spain’s for First Time Since 2007 -Investors question government’s ability to fix public finances -New government said deficit risks exceeding 6% of GDP in 2024 (Bloomberg) - #France’s #bonds are now judged to be riskier than those of #Spain for the first time since 2007, a symbolic reversal pointing to the extent of its financial-market woes. With Prime Minister Michel Barnier’s newly formed minority coalition struggling to get a grip on deficits after an inconclusive election, the shift in relative status shows how traders are increasingly projecting persistent disarray in Paris onto the price of the country’s debt. Just days since his cabinet was sworn in, the higher risk premium now demanded by investors for French securities stands out all the more given the lower credit ratings bestowed on Spain, once a target of bond vigilantes during #Europe’s sovereign crisis. With Prime Minister Michel Barnier’s newly formed minority coalition struggling to get a grip on deficits after an inconclusive election, the shift in relative status shows how traders are increasingly projecting persistent disarray in Paris onto the price of the country’s debt. Just days since his cabinet was sworn in, the higher risk premium now demanded by #investors for French securities stands out all the more given the lower credit ratings bestowed on Spain, once a target of bond vigilantes during Europe’s sovereign crisis… #investing #fixedincome #markets #economy