This is an analysis piece, not a news report: the Financial Times argues the ECB should pause quantitative tightening while French bond markets are in turmoil. The factual case behind the argument is that the 10-year OAT-Bund spread has reached around 140 basis points, its widest since the 2012 eurozone debt crisis, with Reuters recording 132.86 basis points as early as October 1. French 10-year yields have approached 5%, and market pricing for ECB rate increases through mid-2027 has fallen by around 30 basis points from its peak as the sell-off intensified.
The ECB’s tightening so far has been substantial. It has shed 3.70 trillion euros, or 52%, of its QE assets since the mid-2022 peak, bringing holdings down to 3.47 trillion euros, and at its September 10 meeting it raised the deposit facility to 2.50% while confirming the APP and PEPP portfolios keep declining at a “measured and predictable pace” with no reinvestment of maturing securities.
The counterweight is the ECB’s own stated backstop: it says it stands ready to adjust all instruments and that the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics threatening transmission. The live question is whether the current stress counts as disorderly enough to trigger it, or whether the Governing Council treats wider spreads as markets doing some of the tightening work for them.