The premium investors demand to hold French bonds instead of German debt rose to its highest since late 2012 on Monday after a poll showed the far-right Marine Le Pen narrowing the gap with centrist opponents in the race for the French presidency.
Renewed selling in French bonds rippled through euro zone bond markets, helping to push yields on short-dated, safe-haven German bonds to a record low, although the impact faded as the day wore on.
A poll released on Monday showed Le Pen 16 points behind centrist Emmanuel Macron, down from 20 points previously for a potential second-round run off scheduled for May. Le Pen was 12 points behind conservative candidate Francois Fillon, from 14 points previously.
Le Pen is expected to win in the first round, in April, and investors are concerned about her anti-euro stance, among other factors.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.