Debt Crisis Back? European Bond Markets Crash, CDS Explode Amid France Budget Panic Contagion

European bond markets jolted Thursday as sovereign risk fears resurfaced, pushing credit spreads, CDS and euro-area government bond risk premiums to levels not seen in more than a decade. The move followed a selloff tied to concern over France’s fiscal and political situation, which investors say could spill into other markets. The spread between Italy and Germany on two-year yields nearly doubled to 55 basis points, while France’s equivalent gap rose by as much as 22 basis points. The gap between 10Y French OATs and 10Y Bunds climbed to 1.41%, the widest since the 2012 crisis.