Maybe S&P didn’t actually make a mistake when it accidentally downgraded France last week:
French bond yields rose to four-month highs Friday, as investors worried about the country’s fiscal strains one day after Standard & Poor’s Ratings Service erroneously issued a message saying the firm had cut France’s triple-A credit rating.
The euro zone’s second-largest economy now has the highest government bond yields among its triple-A-rated peers in the region. Investors are demanding the highest premiums, compared with save-haven German bunds, to hold French bonds since the advent of the euro.
The yield on the benchmark 10-year bond climbed 0.02 percentage point to 3.46% Friday. That was 1.66 percentage points over yields on comparable German government bonds and just a whisker under a euro-era high.
The French 10-year bond was yielding around 3.30% earlier on Thursday. prior to the S&P error. The magnitude of the move since then suggests investors believe the erroneous statement may indicate the future direction of France’s rating.