Euro-zone government bond yields extended declines on Wednesday as fixed-income desks rotated into duration paper, buoyed by a pullback in global energy prices and fresh diplomatic overtures between the United States and Iran.
Germany's 10-year Bund yield fell to 3.448%, while the two-year Schatz dropped to 3.19%. The selling pressure across European sovereigns came as U.S. President Donald Trump signaled openness to direct talks with Iranian officials at the UN General Assembly, dampening risk premiums embedded in energy markets.
Brent Crude tumbled below $100 a barrel, trading at 98.98, as a senior Iranian official told Reuters that the Strait of Hormuz — a critical chokepoint for global oil shipments — could reopen within seven days. The official said the conditions included Washington lifting its naval blockade of Iranian ports and scaling back military pressure.
Natural-gas prices also pulled back on the prospect of reduced supply disruptions through the Persian Gulf.
French government debt diverged sharply from core European peers. French 10-year OAT yields were driven higher by more than 90 basis points in 2026, as structural fiscal strain and parliamentary gridlock prompted investors to demand a wider risk premium. France's national debt is projected at 119.3% of GDP in 2026 and is expected to expand to 121.7% in 2027.
Market participants now turn to the flash Eurozone Purchasing Managers' Index survey for September, due later in the day, which will provide the first read on private-sector activity in Germany and France following the ECB's rate increase two weeks prior.
