‘It’s not EU’: Do government bond spreads spell eurozone break-up?

Divergence between EGB yields is in the EU’s make-up; only a shared risk architecture can reunite them

French political instability has thrown the divergence between OAT and Bund yields into the spotlight in recent weeks. But spreads between the bonds of the European Union’s two largest economies – and those of their closest economic allies – have been a feature of the eurozone for almost 15 years.

While these interest rate differentials aren’t supposed to happen in a single currency regime, ironically, they’re hardwired into the eurozone by the very agreements designed to establish their unity –