European rates research is coalescing around one idea: most of the ECB's tightening is now in the price, and eurozone bonds are starting to look better value than US Treasuries.
The published research points out that 2-year eurozone yields have already fallen more than 30bps since mid-June, driven by softer inflation readings and fading confidence in further hikes. Still, several analyst camps expect at least one more ECB move — one view flags September as "pretty likely" given sticky core inflation, while another sees hikes running through year-end and feeding into higher mortgage costs in places like the Netherlands.
A more strategic thread argues the end of the cycle is close: with perhaps one hike left, the bulk of repricing is done, and eurozone government bonds — especially intermediate and long maturities — look more attractive than US Treasuries, with yields likely to stabilise or drift lower.
The apparent split (front-end falling vs. more hikes ahead) is really about horizon: markets are moving before the last hikes land.