Core Insights - Europe is facing a new wave of sovereign debt crisis threats, with major economies like France experiencing significant selling pressure on long-term government bonds, leading to rising yields and increased refinancing costs for heavily indebted nations [1][2][5] - Political turmoil in France is exacerbating the crisis, with a failed confidence vote expected on September 8 regarding Prime Minister François Bayrou's austerity budget, alongside planned nationwide strikes [1][5] - Germany, once praised for its conservative fiscal policies, has opened the door to severe market turmoil through a trillion-euro debt plan, risking its credibility and that of its EU partners [1][5] Group 1 - Long-term government bonds are facing widespread selling pressure across major economies, including the US, Japan, the UK, and France, resulting in rising yields [2] - The stability of the global financial architecture relies on long-term bonds from the US, Japan, and the Eurozone, with banks, sovereign pension funds, and insurance systems suffering heavy losses from the sell-off [3] - The loss of market trust in long-term government bonds, once considered safe, is evident as investors flee to safe-haven assets like precious metals or cash, typically in USD or Swiss Francs [5] Group 2 - The next round of the debt crisis may follow a pattern similar to the crisis 15 years ago, with contagion spreading from one country to another, testing the stability and resilience of each nation amid a wave of bond sell-offs [6] - The European Central Bank (ECB) is preparing to utilize its emergency toolbox, including long-term refinancing operations (LTRO) and emergency liquidity assistance (ELA), to stabilize the government bond market and prevent a banking crisis [6] - ECB's focus remains on stabilizing the government bond market, which is the most vulnerable sector during the crisis, with measures including public sector purchase programs (PSPP) and the newly introduced Transmission Protection Instrument (TPI) [6][7]