Euro area bond yields look set to drift higher before any eventual reversal — that's the dominant message from recently published research on the region.
One strand of analysis forecasts German Bund 10Y yields rising from 2.6% to 3.1% by end-2026, with French OAT yields heading toward 3% and Italian BTPs moving in parallel. The argument: inflation sticking at or above the ECB's 2% target while growth recovers only gradually.
A separate camp of researchers expects another ECB hike as soon as September or October, pointing to resilient activity and core inflation tracking near 2.5%. They lean on ECB Chief Economist Philip Lane's recent signal that the neutral rate may now sit as high as 2.5%. A related thread argues that surging global investment demand — AI build-out and defence spending — is structurally lifting equilibrium rates, raising the bar for any easing.
Where views appear to split is mostly timing: some analysts see near-term hikes, others see cuts beginning next year. Both can be right in sequence — tighten now, ease later.