European bond yields look set to drift higher into 2026–27, according to most recently-published research — but a notable contrarian view sees German Bunds as a medium-term buy.
The bearish camp leans heavily on ECB policy. One published forecast pencils in four straight 25bp hikes between June and October, taking the policy rate to 3%, with inflation drifting toward 3.5–4% and the ECB determined not to repeat its 2022 delay. Researchers in this camp project Eurozone 10-year yields rising from 2.3% to 3.0% by 2026–27, and German Bund yields climbing from 2.3% to 3.1%. A separate cross-asset read notes markets have already repriced from expecting cuts to pricing in more than two hikes by year-end — keeping pressure on bond prices.
The contrarian thread argues the opposite on Bunds: weak Eurozone growth, soft productivity, and the absence of the fiscal strains weighing on US Treasuries make ~3% 10-year Bunds attractive value. Both sides agree on ECB hikes — they just draw opposite conclusions for prices.