Hollande Loses Bond Market Love

French yields may rise as the economy stagnates and joblessness rises.

French President Francois Hollande’s honeymoon with bond investors may be ending as economic reality bites.

Hollande, who returned from a 15-day summer break last week, faces an economy that hasn’t grown in three quarters, rising joblessness, a ballooning trade deficit and the task of coming up with a plan in the next few weeks to plug a budget hole of more than 30 billion euros ($37 billion) for next year.

Sliding Returns

French debt is “rich relative to fundamentals,” said Padhraic Garvey, head of developed markets debt strategy at ING Bank NV in Amsterdam. “The spread is vulnerable if we have a re-ignition of peripheral scares in coming weeks or months.”

Losing Confidence

For the first time since Hollande took office on May 15, a majority of French voters lack confidence in his ability to run France, pollster CSA said Aug. 23.

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