European bond yields look set to grind higher, according to the dominant thread in published research this week, as the ECB is widely expected to hike further into a rebound in eurozone inflation — a bearish setup for sovereign bond prices.
Researchers broadly point to resurging inflation as the catalyst. One published view sees two ECB hikes — one around June/July, another in September — with inflation not peaking until late 2026. A similar camp of analysts pencils in two 25bp hikes in 2026, lifting the deposit rate to 2.5% by year-end, with inflation climbing to 3.0% in 2026 and 3.3% in 2027. Some recent research adds the Israel-Iran conflict as an energy-price risk that reinforces the case to tighten, and expects the Governing Council to signal more hikes ahead. A more cautious thread notes that while a 25bp move is fully priced, the ECB is unlikely to pre-commit given softer macro data.
On Bunds, researchers flag near-term upward yield pressure from Middle East risk-off flows. A contrarian, longer-run view argues safe-haven demand will structurally compress Bund yields as Europe's status as a global haven grows.