Eurozone Bonds Consolidate as ECB's Lagarde Rules Out French Debt Market Backstop

Eurozone government bond yields consolidated on Wednesday, with Germany's 10-year Bund yield holding at 3.454% after European Central Bank President Christine Lagarde pushed back against deploying the Transmission Protection Instrument to support French debt. French sovereign paper had previously come under pressure from a projected 5.4% budget deficit, debt nearing 120% of GDP, and political uncertainty, lifting its 10-year OAT yield to 4.90% on Monday and widening the spread over German Bunds to 142 basis points. The stress spilled across the euro area, pushing Italy's BTP-Bund spread to its widest levels since May 2025.