The turmoil in France's bond market is the worst it has been since the decade of the Reign of Terror. This assessment, based on a systematic comparison of long-term historical yield data, highlights the severity of the current combined fiscal and political risks, exceeding the scope of ordinary market fluctuations. On October 6, 2026, high school students, along with unions and teachers, held a demonstration demanding improved learning conditions. During the demonstration, one protester held a sign with a French slogan that read, "Tax the rich, not our future hopes." These protests not only reflect the long-standing problem of insufficient investment in the education system but also further exacerbate market concerns about future government spending expansion, further eroding bond investors' confidence in fiscal discipline. France's massive budget deficit has driven borrowing costs to their highest level in decades—and the consequences have proven far more profound. The persistently high deficit has not only pushed up government bond yields but also could trigger a chain reaction, impacting the banking system, corporate financing costs, and overall economic growth expectations. This year, France's budget deficit is projected to reach 5.4% of GDP, far exceeding other EU member states and surpassing the EU's 3% limit. France has not achieved a balanced budget since 1974. Coupled with an aging population, the fiscal pressure on France, the EU's second-largest economy, will continue to intensify. Furthermore, since last month, students have launched large-scale protests demanding increased investment in domestic high schools. An aging population means long-term rigid increases in pension and healthcare spending, while the education protests increase political pressure to expand public spending in the short term; the combination of these factors further narrows the scope for fiscal consolidation. Bond traders have already factored all these factors in. The spread between the yield on French 10-year government bonds and that of their German counterparts is around 1.4%, approaching levels seen in 2012. This widening spread suggests the market is reassessing French sovereign credit risk and differentiating it from core Eurozone countries. However, according to Jim Reid and Henry Allen of Deutsche Bank, based on data recorded in the Bloomberg database since German reunification in 1990, the yield spread actually widened to its largest level on record during last week's turmoil. This record high reflects investors' extreme caution regarding French political stability and fiscal sustainability. Macroeconomic strategists also found that French 10-year bonds experienced their worst decade in nominal yields in 223 years; during that time, the Reign of Terror (1793-1794), a particularly brutal period of the French Revolution, was still included in 10-year yield calculations. This means that even when the most turbulent years of the Revolution are included in the comparison, the current decade's bond returns are still the worst in over two centuries, highlighting the historical rarity of this adjustment. Meanwhile, France's debt is also rising steadily, currently reaching €3.5 trillion, or approximately $3.92 trillion. During the 2008 global financial crisis, France's debt-to-GDP ratio was roughly equivalent to Germany's, but far lower than Italy's. This rapid increase in debt has fundamentally changed France's public finance structure, shifting it from relatively stable to highly indebted. Reid and Allen wrote in a recent report, "But today this ratio is far higher than Germany's and close to Italy's. Apart from a temporary increase due to the COVID-19 pandemic, Italy's debt-to-GDP ratio has remained stable for over a decade." They particularly emphasized that while Italy has a high debt level, it has achieved relative stability in recent years through fiscal discipline, while France's debt has shown a continuous deterioration trend, which is a key concern for the market. They stated that compared to Germany, Italy, and Spain, France now has the highest bond yields. This means that among the major Eurozone economies, France has become the sovereign issuer with the highest risk premium, with significantly higher financing costs than before. The French stock market has also performed poorly, with its benchmark CAC40 index lagging far behind other major European stock indices. Since the beginning of 2024, the index has risen by only 4%, while the European STOXX 600 index has risen by more than 30%, and Germany's DAX index has risen by more than 50%. The synchronized weakness in both the stock and bond markets reflects a decline in investors' overall risk appetite for French assets, with funds accelerating their flow to other European markets.