Euro zone government bond yields extended their decline on Wednesday as fixed-income desks bought duration paper following a pullback in global energy prices and diplomatic overtures out of New York. Germany's 10-year Bund yield fell to 3.448%, while the two-year Schatz yield dropped to 3.19%. Brent Crude Oil prices retreated below $100 a barrel, with a real-time data point showing 101.11, up 1.02% or 1.02 on the previous day.
The market movements were influenced by U.S. President Donald Trump's indication of openness to direct talks with Iranian counterparts at the UN General Assembly. A senior Iranian official stated to Reuters that the Strait of Hormuz could reopen to international maritime traffic within seven days, provided Washington lifts its naval blockade of Iranian ports and scales back military pressure.
French government debt underperformed core peers due to structural fiscal strain and political friction, widening the French-German yield spread. French national debt-to-GDP ratio projections are at 119.3% in 2026, expanding to 121.7% in 2027. French 10-year OAT yields were driven higher by over 90 basis points in 2026. Attention shifted to flash Eurozone PMI survey data for September due later in the day.
