French PM Lecornu Quits Amid Backlash Over Macron’s Cabinet

• French Prime Minister Sébastien Lecornu resigned Monday after President Macron’s cabinet reshuffle triggered widespread criticism.
• French bond yields climbed as investors reacted to heightened political instability.

TradingKey - French Prime Minister Sébastien Lecornu resigned Monday, a day after President Emmanuel Macron unveiled a new cabinet that drew sharp backlash from both allies and opponents, intensifying France’s political turmoil.

French government bonds sold off on the news as investors assessed the growing uncertainty surrounding Macron’s administration. The yield on 10-year notes jumped nine basis points to 3.6%, widening the spread over German bunds to more than 89 basis points — the highest since late 2024. The widening spread signals mounting investor concern over France’s fiscal trajectory and governance stability.

Macron’s reshuffle on Sunday left much of his cabinet intact, frustrating supporters who had called for a stronger reset to revive his weakened political standing. The tepid changes triggered criticism from across the political spectrum, including from within his own centrist alliance.

Lecornu’s abrupt exit underscores the mounting pressure on Macron, whose party has struggled to maintain parliamentary control amid rising social tensions and economic headwinds. Investors now face renewed uncertainty over France’s fiscal plans, particularly as the government prepares its 2026 budget and contends with elevated borrowing costs.