Published research is leaning hawkish on European rates, with most analysts pointing to higher Bund yields and looming ECB tightening — though one tactical counterpoint stands out.
The dominant view among recently published forecasts is that the ECB delivers two rate hikes over the next year as eurozone inflation gets revised up to 3.1%. That research sees 2Y Bund yields climbing to 2.3%, 10Y to 2.9%, and 30Y to 3.5% — meaningful price declines across the curve. A separate strand of analysis points to ECB President Lagarde signaling upward revisions to 2026 inflation forecasts, with futures markets pricing a 93% chance of a June 11 hike. Other published work argues markets are also pricing in a follow-up hike in July.
The long end takes the most pain in this scenario — term premium repricing higher as sticky inflation meets a tightening ECB.
The contrarian thread: one tactical view sees Bund yields falling sharply if Middle East ceasefire progress holds, as risk premiums compress. Note the horizons differ — 12-month structural call versus a short-term tactical trade. Both can be right.