European government bonds are facing broad selling pressure, and recently published research expects the pain to continue into 2027.
The bearish case, laid out across several analyst notes this week, ties the outlook to energy-driven inflation from the Middle East conflict. Eurozone inflation swaps have pushed toward 3.5%, and the consensus in published research is that the ECB signals at least one hike at its June meeting, with markets pricing two to three quarter-point moves over 2026.
Specific targets from this research: German 10-year Bund yields rising to 2.95% by 2026, Spanish 10-years reaching 3.45%, and Portuguese yields around 3.40%. Peripheral spreads over Bunds are seen widening modestly — Spain from roughly 45 to 60 basis points by 2027 — meaning the periphery underperforms the core even as both sell off.
One nuance worth flagging: a parallel strand of analysis agrees on near-term ECB hikes but expects a pivot to cuts by 2027 as energy-led inflation fades. Not a contradiction — just a sequential path.