European bond yields look set to grind higher, according to the bulk of research published this week — bad news for bond prices.
The dominant view across analysts is that the ECB isn't done tightening. Most recently published research points to another hike likely in September, following June's 25bp move, with energy-driven inflation from the Middle East conflict keeping price pressures above target through 2026–2027. One research note forecasts German 10-year Bund yields climbing from 2.6% to roughly 3.3% by mid-2026. Others argue European rates broadly rise about half a percent as fuel inflation proves sticky. A more aggressive scenario flagged in recent work: if oil pushes above $100, a third ECB hike becomes plausible, lifting yields further.
On relative value, one camp of analysts prefers German Bunds over US Treasuries strategically, and holds high-conviction overweights on Spanish and Greek government bonds versus core peers.
The contrarian thread: a separate strand of research expects ECB cuts beginning around 2027, which would eventually pull yields lower — but that's a long-horizon call, not a challenge to the near-term hawkish consensus.