Published research is leaning bearish on European bonds, with multiple analysts arguing yields have further to climb as inflation proves sticky and the ECB stays in tightening mode.
The base case from one research thread sees 10-year Bund yields drifting from 2.6% toward 3.0% through 2026, with broader eurozone government yields tracking a similar path. The reasoning: above-target inflation and gradual ECB normalization. A separate strand of analysis reinforces the hawkish read, noting that Lagarde, Lane and Schnabel have all explicitly signalled hikes, with roughly 50bp of cumulative tightening pencilled in for this year and eurozone headline CPI projected to push near 4% by year-end. Lagged energy effects, some argue, will keep feeding through for several more quarters. One contrarian-leaning observation flags that EUR 2-year inflation swaps are drifting structurally higher — around 30bp per month while current geopolitical strains persist — reinforcing the sticky-inflation picture.
At the credit level, the published views are dominated by relative-value switches between specific issuers and maturities rather than outright directional calls — for instance, preferring shorter-dated EDF paper over longer-dated lines within the same name.