Eurozone bond yields remained stable on Wednesday after inflows into long-term securities. Christine Lagarde's comments had no noticeable impact on the French market.
Eurozone government bond yields mostly remained stable on Wednesday. The market consolidated after a strong inflow of institutional funds into long-term securities, which had previously stabilized the yield curve.
The benchmark for the eurozone — the yield on German 10-year bonds — held around 3.454%. This level is close to the more than one-week low recorded on Tuesday, when duration managers locked in higher yields at the long end of the curve.
French bonds barely reacted to the statements of European Central Bank President Christine Lagarde. The market, already hit by political paralysis and budget issues, ignored her comments. In an interview with Reuters, Lagarde ruled out the possibility of ECB intervention to reduce France's borrowing costs. She emphasized that Paris must solve budget issues on its own through domestic consolidation, rather than counting on central bank support.
Lagarde also reduced the likelihood of activating the Transmission Protection Instrument. Investors, according to her, should take into account the increased risk premium on French OATs while the government attempts to pass a budget with a 5.4% GDP deficit.
Activity on European platforms remained subdued in anticipation of US inflation data. Portfolio managers are monitoring the consumer price index to assess whether global rates will remain high for longer. Geopolitical risks in the Middle East support energy prices, which heightens inflationary expectations.