Published research this week leans hawkish on European rates: most analysts expect Eurozone sovereign yields and ECB policy rates to grind higher as energy-driven inflation keeps the central bank in tightening mode.
The trigger was the ECB's 25bp hike and its warning about upside inflation risks tied to the Middle East conflict and energy shocks. Core inflation is projected to stay above 2% well into 2027–2028 in most forecasts, and upgraded staff projections have reinforced expectations for more tightening. The published consensus sees two to three additional hikes in 2026, taking the deposit rate to around 2.5–2.75%, with September flagged as the likely date for the next move — though some researchers expect subsequent hikes to be modest given fragile growth.
On yields, several analysts see 10-year Bunds edging above 3%, with the sharpest repricing at the short end. A contrarian thread argues Eurozone 10-year bond prices look attractive if the ECB under-delivers versus what markets have priced. In credit, researchers flag stress at the CCC end of European high yield, with spreads near 2025 highs.