The Politics Premium Is Punishing Bonds From Paris to Tokyo

Bond holders want an ever-higher premium to hold the debt of developed-nation governments as turmoil in France and Japan underscores how politics is eclipsing central bank policy globally as a key market driver.

A gauge of French bond-market risk rose to its highest levels this year last week after Prime Minister Sebastien Lecornu resigned amid a budget impasse, only to be reappointed Friday night. In Japan, longer-maturity bonds plummeted as Sanae Takaichi’s surprise elevation to the top of the ruling party spurred concern about greater spending. Days later, her governing coalition had collapsed.