European bond yields are under upward pressure, and the published research consensus points to ECB tightening as the main driver.
Researchers argue persistent eurozone inflation — amplified by high energy costs — will force the ECB's hand. One camp of analysts puts a June 25bp hike at over 90% probability, lifting the deposit rate to 2.50% and pushing German 10-year Bund yields toward or above 3.0%, with two or three hikes pencilled in for 2026. Other recently-published views see additional moves in September and December if energy markets stay tight. Analysts also flag that 12-month Euribor has already climbed from 2.2% to 2.8%, showing money markets are pricing this in.
On credit, the published view splits European investment grade from high yield: IG spreads are expected to hold up or tighten on quality demand, while HY spreads are seen widening as risk premia look too thin.
A contrarian thread argues Bunds could rally — but only if geopolitical tensions ease and oil retraces. On a shared energy-inflation baseline, the bearish yield call dominates.