Published research is broadly aligned: European rates are heading higher in the near term, with the ECB widely expected to deliver at least one — and likely two — hikes that push Eurozone government bond yields and short-dated swap rates up.
The driver, analysts argue, is sticky inflation, amplified by energy disruptions tied to the closure of the Strait of Hormuz. The consensus across recent research treats the June ECB meeting as a near-certain hike, with one camp describing it as a "slam dunk." A follow-up move in July or September is widely expected to bring the deposit rate to 2.50%, and some published views see tightening extending through 2026.
On the long end, researchers expect Eurozone 10Y yields to stay sticky — supported by heavier issuance as the ECB shrinks its portfolio and by Germany's fiscal boost — though this view is explicitly conditioned on avoiding recession. One analytical thread highlights the 2–5Y segment as the most attractive duration play, with less upside pressure than the long end.
A tactical note flags Bund Futures buyers stepping in at 125.55 support, suggesting a bullish bias if that level holds.