French markets are showing mounting signs of stress as high government debt, political gridlock and the 2027 presidential election weigh on investor sentiment. The spread between French and German 10-year borrowing costs has climbed above 110 basis points, its highest level since the euro zone crisis in 2012. Investors are also positioning for further pressure through OAT futures, while French five-year credit default swaps (contracts protecting against sovereign default) have reached 52 basis points, the highest since April 2017 and twice their level six months ago. France's stock market has fallen 0.5% this year, compared with an roughly 8% gain for broader European markets, and the OECD expects the economy to grow 0.4% in 2026 versus 1% across the euro zone. Domestic banks have lagged, while the euro has dropped below $1.14 and euro zone bond yields have risen. Analysts have highlighted the possibility of a 2027 runoff between Marine Le Pen and Jean-Luc Melenchon, another credit-rating downgrade after Scope's action, and uncertainty over whether the European Central Bank would need to contain a disorderly rise in French borrowing costs.