Markets
France's 10-Year Yield Closed Above 5% for the First Time Since 2002 and Carrefour Fell 14% on a Profit Warning Blamed on Riots. UK Inflation Rose to 3.5%. The DAX Rose 1.35% Anyway
The yield on France's 10-year government bond rose 6.4 basis points to 5.009% on October 21, its highest since 2002 and about 159 basis points above the German Bund at 3.421%, as investors kept questioning the country's fiscal position. Carrefour fell as much as 15% in Paris, its largest intraday drop since 2017, after cutting its 2026 outlook and saying riots and looting could cost up to €200 million of operating income. British inflation rose to 3.5% in September, above the 3.4% expected. European stocks rose regardless: the DAX gained 1.35% to 25,647.10, the CAC 40 1.06% and the Stoxx 600 0.92%, its first gain in three days.
Europe's bond market and its stock market disagreed on Wednesday, and the stock market won the day. The French 10-year OAT yield rose 6.4 basis points to 5.009%, the first close above 5% since 2002, taking its spread over the German 10-year Bund, which rose 0.4 basis points to 3.421%, to about 159 basis points; Italy's 10-year rose 4.2 basis points to 4.589% and Spain's 2.5 to 4.079%. The driver, according to the closing reports, was the same as all month: investors questioning France's fiscal position after a weekend of riots in Paris that President Macron vowed would not be repeated, with a Yellow Vest march planned for Saturday. British gilts went the other way, the 10-year falling 4.9 basis points to 5.381%, even after the Office for National Statistics said consumer prices rose 3.5% in the year to September, against 3.4% expected and the highest since October 2025.
The equity market read the unrest through one company. Carrefour cut its 2026 guidance before the open, to operating-margin growth of zero to 15 basis points from 25 and adjusted earnings per share flat to slightly higher from high single-digit growth, and said the deteriorating social and security situation in France would hurt operating conditions; Reuters reported the riots and looting could reduce operating income by as much as €200 million. The shares fell as much as 15%, the biggest intraday decline since 2017 by Bloomberg's count, closed down about 14% according to CNBC, and lost about €1.7 billion of market value. Randstad, the Dutch staffing group, rose about 20% on its results, which says the day was about company news rather than the country.
The indexes rose on earnings and on Russia. The DAX gained 342.67 points, or 1.35%, to 25,647.10, the CAC 40 83.19 points, or 1.06%, to 7,921.69, Milan 1.17% to 49,643.68, Madrid 1.21% to 19,323.50 and the Stoxx Europe 600 0.92% to 644.49, its first gain in three sessions; London lagged, the FTSE 100 up 0.19% at 10,752.87 on the inflation print. The risk-on tone came partly from reports that Russia had agreed to renewed technical-level talks with Ukraine and the United States on or after November 10, after President Putin hosted the US envoy Steve Witkoff, which eased energy worries enough for crude to fall below $97 during the European afternoon.
The number to keep is 5.009%. A French government paying more than 5% for ten years, 159 basis points over Germany, is a level the eurozone last saw before the euro was ten years old, and it arrived on a day the French stock index rose 1%. Equities are pricing the earnings of companies that sell outside France; the bond market is pricing the state. Carrefour, which sells inside France, is where the two met, and its 14% fall is the equity market's first explicit price for what the bond market has been saying since the summer.