Data as of: Friday, October 2, 2026 close Issued: Saturday, October 3, 2026 Evidence key: CONFIRMED (primary source), REPORTED (multiple outlets), RUMORED (unverified market reporting), ANALYTICAL (inference).
The October 1 Budget Act for 2027 targets a 5.0% deficit — down from 5.4% this year, but 6.5% without measures — with debt rising from 119% toward 122% of GDP and a record €340 billion of net bond issuance, €28 billion more than 2026. Debt service alone hits €72.9 billion. Markets hated it.
The OAT–Bund spread blew out to 149bp intraday Friday, the widest since 2012, from about 84bp in early September. The 10-year OAT sits near 5%, its highest since 2002. Scope cut France to A+ in September. ING sees a test of 150bp, with Le Pen/Mélenchon 2027 election tail risk in the background — Mélenchon has floated converting Banque de France-held bonds into zero-coupon perpetuals.
The fragmentation signature is clean: safe-haven flow crushed Bunds to 3.45% on Friday, down 8bp, while OATs barely budged. Eurozone September CPI printed 3.8% year on year, the highest since September 2023, and the ECB — which hiked to 2.50% on September 10 — may move again as early as October 29. ECB tightening expectations colliding with French fiscal reality is the tension to watch; Deutsche Bank already notes financial-conditions tightening is “doing part of the ECB’s job.”