French markets are showing mounting stress as high government debt, a substantial primary deficit, political gridlock and the 2027 presidential election weigh on investor sentiment. France's 10-year OAT yield reached an 18-year high of 4.7%, while the spread over German 10-year borrowing costs rose above 110 basis points, the widest since the 2012 euro zone crisis. French five-year credit default swaps reached 52 basis points, their highest level since April 2017 and double their level six months earlier. Rising oil prices, stronger economic data and eurozone private-sector activity expanding at its fastest pace in nearly three and a half years have increased expectations of further European Central Bank tightening. However, weaker French growth prospects, political uncertainty, possible further credit-rating downgrades and underperformance by French stocks and banks continue to pressure assets. The OECD expects France to grow 0.4% in 2026, compared with 1% for the euro zone. Markets are pricing at least one 25-basis-point ECB rate increase by year-end, around a 40% probability of a second, and currently expect at least three increases by April, although some analysts consider that path too aggressive. The euro has fallen below $1.14, while Brent crude has risen as Middle East tensions cloud prospects for a diplomatic resolution to the US-Iran war.