Oil and gas prices jump on Middle East shipping attacks, sending bond yields higher and stocks lower – business live

Eurozone finance ministers and the European Central Bank will urge France today to pass its 2027 budget to calm bond ⁠markets, as French borrowing costs ⁠hover at 25-year ​highs, senior euro zone officials told Reuters.

France is at the centre of a bond market storm, fuelled by worries over the country’s large budget deficit and looming presidential election next year.

Its ⁠10-year bond yield has jumped nearly 80 basis points (bps) since the start of September and hit its highest level since July 2002, just short of 5%. That is driving up the government’s borrowing costs ⁠and making things even harder.

Eurozone finance ministers and the ECB meet in Luxembourg this afternoon for monthly ​talks and the surge in French borrowing costs will ‌be discussed.

I think the clear answer is “no“. I would expect the Eurogroup to recognise that France has all the means to respond. The proper response is to agree on a budget. That’s kind of a no-brainer. So I would expect this to be the main message.

The ECB can buy bonds of a eurozone country on the secondary market if their prices move in an unjustified way ‌to protect the proper transmission of monetary policy. But officials said this does not apply to what is currently happening in France. A second senior eurozone official said:

Everybody has their own mandate. The European Central Bank has a mandate to ​maintain price stability, and governments have a mandate to maintain the fiscal stability of their countries. Everybody should do their own job.

France said last month that its budget deficit will exceed the government’s target of 5% of GDP this year. It plans to sell a ​record €340bn of bonds in 2027 to ​fund the government and refinance Covid-era debt.

Eurozone officials said there was concern about ​French borrowing because it created ‌conditions for a broader ​crisis, but added there was no ​sign of contagion yet to other countries in the currency bloc.

Since the creation of the euro in 1999, France – the European Union’s second biggest economy and a key political player – has only had a budget deficit below the EU’s ceiling of 3% six time.