- Κυρ Οκτ 25, 2026 10:20 am
#262
The Eurozone flash PMI for October 2026 slowed to a four-month low, driven by rising energy costs and a sharp contraction in France, while Germany showed relative resilience Eurozone S&P Global Manufacturing PMI Oct 52.4 (estimate 52.8 and previous 52.9), Services PMI 51.7 (estimate 52.5 previous 53) and Composite PMI 51.9 (estimate 52.7 and previous 53.1).
European diesel prices are approaching $200 per barrel, while Eurozone industrial production has contracted by another 1.1% year on year. For the ECB, the dilemma is increasingly difficult because raising rates could contain inflation but would also weaken demand, increase sovereign financing pressures accelerate industrial decline and doing the opposite with rates it will have more inflation.
France's 10 year bond yield spread over Germany spiked by more than 30 basis points, marking its largest weekly increase in at least 36 years.This surpasses the largest increases recorded during the Eurozone debt crisis of 2010-2012.
France currently faces the largest fiscal deficit in the Eurozone (exceeding 5%), a debt-to-GDP ratio standing at 119%, sluggish economic growth, and inflation near 3%.
France is not Greece, Greece’s crisis was primarily a crisis of statistical credibility and trust. In contrast, France’s deficit, while high, remains manageable, with markets primarily demanding higher yields rather than cutting off access entirely.
The likelihood of default or a credit event for France remains minimal. The country is considered "too big to fail," and the ECB possesses the tools (ESM and TPI) to intervene against disruptive sell-offs. However, difficult fiscal consolidation measures will be unavoidable in the near term.
European diesel prices are approaching $200 per barrel, while Eurozone industrial production has contracted by another 1.1% year on year. For the ECB, the dilemma is increasingly difficult because raising rates could contain inflation but would also weaken demand, increase sovereign financing pressures accelerate industrial decline and doing the opposite with rates it will have more inflation.
France's 10 year bond yield spread over Germany spiked by more than 30 basis points, marking its largest weekly increase in at least 36 years.This surpasses the largest increases recorded during the Eurozone debt crisis of 2010-2012.
France currently faces the largest fiscal deficit in the Eurozone (exceeding 5%), a debt-to-GDP ratio standing at 119%, sluggish economic growth, and inflation near 3%.
France is not Greece, Greece’s crisis was primarily a crisis of statistical credibility and trust. In contrast, France’s deficit, while high, remains manageable, with markets primarily demanding higher yields rather than cutting off access entirely.
The likelihood of default or a credit event for France remains minimal. The country is considered "too big to fail," and the ECB possesses the tools (ESM and TPI) to intervene against disruptive sell-offs. However, difficult fiscal consolidation measures will be unavoidable in the near term.