Roaring exports lift China’s growth as Europe reels
Strong exports lifted China’s economic growth, while unrest in France put pressure on the euro and French government bonds. The Guardian’s business live report also tracked declines in French and Italian markets, as investors watched the widening gap between French and German bond yields and awaited a review of France’s credit rating by Moody’s.
Strong exports have lifted China’s economic growth, while protests in France are adding pressure to the euro and government bonds. The Guardian reported the developments in a business live update on October 19, as investors also watched French and Italian shares fall.
Markets are under strain. French government bond yields rose as investors sold the debt, while the euro fell nearly 0.4% against the dollar to $1.1201.
The report linked the market pressure in France to widespread and increasingly violent protests, alongside weak economic growth and ballooning debt. The government has yet to pass its budget for next year.
French bond yields rise
The yield on France’s 10-year bond rose as much as 8 basis points to 4.86%. Germany’s 10-year yield, used as a benchmark for the eurozone, was flat at 3.41%, widening the gap between the two countries’ borrowing costs to 145 basis points.
That spread was the highest in two years, although it remained below the near 160bps recorded in early October, when the French 10-year yield reached 4.99%, its highest since 2002, The Guardian reported.
The move matters beyond bond traders: higher government borrowing costs can add pressure to public finances, while a weaker euro affects the currency’s value against the dollar. The source report described the sell-off as fresh pressure on the euro, but did not quantify any resulting impact on households or businesses.
France’s CAC 40 index fell nearly 1.3%, and the broad European Stoxx 600 index lost 0.6%. Shares in French lenders Société Générale and BNP Paribas dropped 2.5% and 2.2%, respectively.
Italian markets also fell. The Milan borsa declined almost 1.3%, with investors concerned that rising French yields could spill over into other heavily indebted countries.
Moody’s review ahead
Moody’s is due to review France’s credit rating on Friday. A downgrade could add further pressure to French bonds, the report said.
The developments put attention on whether political unrest and the unresolved budget will deepen concerns among investors. The Guardian’s update did not report a decision from Moody’s or a change to France’s rating.
China’s export-led growth provided a contrasting point in the report’s lead, but available reports did not include figures or further details on the country’s economic performance. The market figures reported for France included a 4.86% yield on its 10-year bond.
