France’s debt woes pummel the euro to 17-month low

Last week's news flow was dominated by a long march higher in US Treasury yields, but it's borrowing costs on this side of the Atlantic that are now causing concern driven primarily by a sell-off in French paper as investors are increased political risk as well as a debt bill of more than a trillion euros coming due by the end of the decade. France's borrowing costs now exceed those of Greece with the spread on French versus German debt at the highest level since the Euro zone debt crisis as investors crowd into perceived safer securities. Now that dynamic is pummeling the euro which is currently trading around levels not seen since May of last year down nearly 3 and a half% against the greenback since the start of September. A and it could have further to go. Bank of America estimates that every 10 basis point widening in the OAT bun spread could push the currency down by nearly half a percentage point against the greenback. Uh and this morning the French finance minister Rolan Lecure has declared the country is not at the point to start talking about the ECB's transmission protection instrument. That's the anti-fragmentation tool in case you forgot. Even as the latest budget figures today show the balance mismatch steepening on the year at nearly 10060 billion.