France's 10-year government bond yield crossed 5% for the first time since 2002 and briefly topped U.S. Treasurys this week, underscoring growing investor concern about Paris' fiscal outlook.

The yield stood at 5.05% Friday. It has climbed about 47 basis points over the past four weeks and roughly 162 basis points over the past year, according to Trading Economics.

On Thursday, French 10-year yields briefly topped those of U.S. Treasurys for the first time since 2013. That matters for Americans because money flowing from French bonds into Treasurys can help lower U.S. borrowing costs, including mortgage rates.

Mass protests over the rising cost of living and deteriorating school conditions have swept France, with violence and looting reported in several cities. The unrest adds to pressure on Prime Minister Sébastien Lecornu's government to pass a budget ahead of next year's presidential election.

Moody's Maintains Negative Outlook

France got a reprieve late Friday. Moody's Ratings kept the country's rating at Aa3 but maintained a negative outlook, citing political fragmentation.

"The Aa3 rating assumes that a deficit-reducing budget for 2027 will be adopted," Moody's said.

France ran a budget deficit of 5.1% of GDP last year, well above the European Union's 3% ceiling for member states. More than $1 trillion of its debt also comes due by 2030, meaning Paris will need to refinance at today's higher rates.

Last month, the French Finance Ministry warned that the nation's debt-to-GDP ratio is expected to hit 121.7% in 2027.

French Stocks Under Pressure

French banks are especially exposed because they hold large amounts of government debt.

They hold domestic government debt equal to roughly 15% to 30% of their best-quality capital, WisdomTree equity strategist Aneeka Gupta told Reuters. Permanently higher yields would raise their "cost of money every time they refinance, and that compounds," Gupta said.

The country's major lenders will report their financial results next week.

BNP Paribas (BNPQY) reports Wednesday, followed by Societe Generale (SCGLY) Thursday and Credit Agricole (CRARY) Friday. This will give investors a first look at how the bond selloff is hitting bank balance sheets.

Shares of BNP Paribas closed at $46.80 on Friday, down about 1.3% for the year. Societe Generale closed at $13.34, down about 17.4% year-to-date, while Credit Agricole finished at $8.28, down 19.1% this year.

Major Catalyst Next Week

Investors will also be watching whether broader French corporate earnings show signs that rising borrowing costs are spilling into the real economy. Other French large-caps are set to report third-quarter earnings next week.

Energy giant TotalEnergies (TTE) reports Thursday, riding a roughly 42% year-to-date rally fueled by strong oil prices. Analysts expect earnings of $3.84 per share.

Healthcare heavyweight Sanofi (SNY) reports a day later. The stock trades near its 52-week low heading into its results, with Wall Street forecasting earnings of $1.63 per share.

The results will likely set the near-term direction for French stocks.

Fed, ECB In Focus

Earnings won't be the only test for French markets next week. The world's two most closely watched central banks are set to decide on rates.

The Federal Reserve announces its rate decision Wednesday, a day before the European Central Bank. The Federal Reserve is expected to keep rates on hold Wednesday and resume its hiking cycle in December, the Wall Street Journal reported Friday.

ECB President Christine Lagarde has been cool to the idea of stepping in to support French debt. The ECB is expected to keep rates unchanged.

Speaking at a CNN event in Bangkok on Oct. 14, Lagarde said France was more affected than other countries and that "the primary and first solution lies at home in France," Reuters reported, pointing to fiscal policy.

Treasurys Get A Safe-Haven Bid

The French selloff has sent investors toward U.S. Treasurys. This has helped keep yields near recent lows, according to the Wall Street Journal.

The average 30-year fixed mortgage rate eased to 7.32% this week from 7.40%, according to Freddie Mac. The 15-year fixed mortgage rate averaged 6.68%, down from last week when it averaged 6.71%. A year ago at this time, the 15-year rate averaged 5.44%.

That support could fade if Paris passes its budget.

With French yields now on par with U.S. rates, some global investors may also see French bonds as an alternative to Treasurys.

Hormuz Keeps Pressure On

However, events far from Washington, Frankfurt and Paris may impact equities and rate decisions.

October has been the worst month on record for attacks on shipping in and around the Strait of Hormuz, according to the Washington Institute for Near East Policy.

The attacks have kept Brent crude above $110 a barrel all week. President Donald Trump has said the U.S. is "not negotiating" with Iran.

For now, investors are watching whether France can stabilize its finances before higher borrowing costs begin weighing more heavily on banks, stocks and the broader European economy.