No, rising French rates do not signal France…

A seductive intuition, a faulty reading

For a few weeks, a narrative has been gaining visibility on social media: the rise in interest rates on French debt supposedly signals that markets are “pricing” an imminent exit of France from the euro zone. The scenario, popularised by figures such as Marc Touati or François Asselineau, posits that investors anticipate the euro’s explosion, the return to the franc, a wave of monetisation by the Banque de France, therefore galloping inflation and a devaluation of bonds. QED: the rise in the OAT would be the prelude to the great rupture.

This reading is intellectually seductive but factually false. It confuses a classic sovereign risk premium with a pricing of exit from the monetary union, two distinct mechanisms that show up through very different indicators. When you look at the figures, the Frexit scenario is nowhere in the pricing. Here is why.

The OAT rises, but not alone

On 15 May 2026, the 10-year French OAT stood at 3.81%, against 3.11% for the German Bund, a spread of 70 basis points (source: Idéal Investisseur, Banque de France and Deutsche Bundesbank data). Over a year, this spread oscillated between 59 and 85 bps, for an average of 71.8 bps. The current level is therefore within the recent average, not above it.

More important: the rise in French rates is part of a coordinated European and global move. The German Bund crossed 3% this week, the UK 10-year reached its highest since 2008, the US 30-year touched 5.12% on Friday 15 May (source: CNBC, 15 May 2026). If the French rise were caused by Frexit risk, you would observe a decoupling: OAT rising, Bund stable or falling (because capital would flee France for the safety of Germany). The opposite is happening.

The real cause is documented by all mainstream analysts and by the central banks themselves: the Iran-Israel-United States war triggered at the end of February 2026 pushed Brent above $100, the Strait of Hormuz remains closed, and the energy shock is diffusing into inflation expectations. Christine Lagarde, ECB president, publicly acknowledged in April that “high energy costs have deflected the euro zone from its baseline economic trajectory” (Trading Economics, 16 April 2026). Markets now price at least two ECB rate hikes by the end of 2026, whereas they anticipated cuts at the start of the year.

If markets priced a Frexit, the spread would be at 300 bps, not 70

This is the simplest test to run. During the 2011-2012 sovereign debt crisis, when markets actually priced a serious risk of euro-zone fragmentation, the OAT-Bund spread peaked at 225 basis points on 17 November 2011 (source: Banque de France via Idéal Investisseur, full history since 2005). For Greece, the spread against the Bund exceeded 3,000 basis points at the moment exit was seriously contemplated.

The current spread at 70 bps is therefore at 31% of the 2011 peak, and nearly 45 times lower than Greece’s in the depths of its existential crisis. The threshold considered an alert signal by markets is 80 bps (source: Idéal Investisseur). We are below it. The thesis that markets are pricing an exit does not survive a second of examination against the data.

The mechanical drivers of a Frexit pricing are totally absent

When markets genuinely price a risk of monetary rupture, several indicators move simultaneously. None does today:

French sovereign CDS (the cost of insuring against a French default at 5 years) stay at moderate levels, with no exponential rise. In a Frexit pricing, they would explode, as was the case for Greece in 2012.

The EUR/CHF and EUR/USD futures market shows no massive discount on the euro. On the contrary, EUR/USD navigates within its range of the last 12 months. If a French exit were anticipated, the euro itself would be under direct pressure.

Intra-euro-zone TARGET2 balances (the payment system between European central banks) show no massive capital flight from France to Germany. It is this indicator that signalled the Greek risk in real time in 2015.

Deposits in French banks stay stable. BNP Paribas, Société Générale and Crédit Agricole are not suffering capital flight. During the real stress episode of spring 2024 (dissolution of the National Assembly), these banks had lost nearly 10% of market capitalisation in a few days (source: Club Patrimoine, September 2025). Today, nothing of the sort.

Agence France Trésor auctions remain largely oversubscribed. IFRAP notes in its January 2026 analysis that “despite the political tensions, the option of a fall in the auction cover ratio, revealing a form of distrust, has not for now manifested itself”. Yet that is precisely what would happen first if markets anticipated an exit: structural buyers (insurers, pension funds, foreign central banks) would start to withdraw.

The real reason for the French premium is fiscal, not existential

What explains the 70-bps spread (and not 30-40 bps as before 2024) is a real and identified subject: French fiscal deterioration. The official figures (INSEE, Directorate General of Public Finances, Agence France Trésor) are clear:

Public debt: 117.4% of GDP in the third quarter of 2025 (INSEE, November 2025 release)
2025 public deficit: 5.4% of GDP, or €152 billion (DGFiP, end-of-management finance law of 8 December 2025)
2025 interest bill: €52 billion (Agence France Trésor)
Debt issuance planned in 2026: €530 billion total, of which €270 billion of medium- and long-term OATs, an absolute record, above 2020 (the Covid year at €400 billion) (IFRAP, January 2026)

S&P Global downgraded France from AA- to A+ in October 2025, and Fitch followed in September 2025. These downgrades do not anticipate a euro exit, but note a public-finance trajectory judged unsustainable. S&P even projects that French debt will reach 121% of GDP in 2028, against 112% anticipated at the end of 2024.

It is this sovereign risk premium, comparable to that markets demand on Italy or Spain, that explains the differential with Germany. Nothing to do with a pricing of monetary rupture.

Leaving the euro would be financially catastrophic, and markets know it

This is the argument the promoters of the Frexit scenario systematically evade. A euro exit would trigger a cascade of immediate and documented effects:

54.7% of French debt is held by non-residents (Banque de France, Q1 2025 data). A redenomination into francs would amount to a technical default against these creditors, what jurists call a violation of the international lex monetae. Rating agencies would downgrade France several notches into speculative territory (sub-investment grade), as happened for Greece.

Immediate consequence on new financing: the post-exit spread would be estimated at between 400 and 600 basis points above the Bund for several years, according to the work of Jacques Sapir himself, yet favourable to exit. The annual interest bill, already projected at €78 billion in 2026, would explode.

On purchasing power: even Sapir, the economist who defends the project, acknowledges a cumulative inflation of 8% over three years, of which 4.5% in the first year (2012-2017 publications). Mainstream estimates (Patrick Artus at Natixis, Bertelsmann Stiftung) are more pessimistic: -8 to -12% of purchasing power in the first year.

On the French banking system: BNP, SocGen and Crédit Agricole hold massive European assets in euros, their liabilities (French deposits) would move into francs. A balance-sheet mismatch of several hundred billion euros, which would require a public recapitalisation or a nationalisation. Without ECB support since France would have left.

Markets know all this. No rational investor would hold OATs if they anticipated an exit: they would sell them massively. The maintenance of structural demand for French debt demonstrates, a contrario, that this scenario is not priced.

The “experts” cited in support of the Frexit scenario are activists, not analysts

Marc Touati has predicted the explosion of the euro and of French debt since 2010. Like any binary prediction repeated every year for fifteen years, it will statistically end up landing on a market event… but that does not validate the method. François Asselineau is president of the UPR, a party whose central and exclusive programme is precisely Frexit. He is not a neutral economist analysing data: he is an activist for whom leaving the euro is the conclusion to which all analysis must lead.

No bond strategist at a major bank (Natixis, BNP CIB, Société Générale, Crédit Agricole CIB, Goldman Sachs, JPMorgan, Morgan Stanley) supports the thesis of a Frexit pricing in the current spread. All explain it by the combination of the Iranian energy shock, the repositioning of ECB expectations, and the French fiscal premium.

Conclusion: a real worry, but not the one being told

The serious subject behind the rise in French rates exists, but it is not that of a monetary rupture. It is that of fiscal sustainability. France has entered the dangerous zone of the snowball effect: when the apparent interest rate on the debt exceeds the nominal growth rate, debt accumulates mechanically, even without new public spending. The Caisse des Dépôts and the OFCE documented it in their 2025 work.

If the fiscal trajectory does not straighten out, if deficits stay around 5% of GDP, if growth stays listless, if the interest bill keeps rising, France will eventually have to choose between a painful fiscal consolidation (tax rises, spending cuts) and a real financing crisis. But this eventual crisis, several years out, would take the form of a European assistance programme (with conditionality), not a euro exit. No country has ever voluntarily left the monetary union, and all the institutional mechanisms (ESM, OMT, the ECB’s TPI) are designed precisely to prevent a state from being forced into it.

To confuse a fiscal risk premium with a monetary-exit pricing is to confuse a reasonable worry with an apocalyptic scenario. The first is documented and deserves a serious debate on public finances. The second is prophecy, not market analysis.

Primary sources:

Idéal Investisseur, OAT/Bund spread on 15/05/2026.
IFRAP, “2026: record year for France’s debt issuance”, January 2026.
Club Patrimoine, “OAT-Bund spread: France under political pressure”, September 2025.
Trading Economics, 10-year OAT yield.
Putsch Media, “10-year OAT at 3.81%”, March 2026.
CNBC, “Treasury yields surge as inflation data points to tricky rates path”, 15 May 2026.
INSEE, public debt Q3 2025 (November 2025 release).
S&P Global Ratings, France downgrade to A+, 17 October 2025.
Jacques Sapir, publications on the costs of a euro exit, 2012-2022.
Banque de France, holding of public debt by non-residents, Q1 2025.