European bond yields look set to grind higher, according to research published this week, with Bunds, core euro sovereigns, and peripheral spreads all under pressure.
The dominant driver, analysts argue, is renewed Middle East tension reviving inflation worries and hardening expectations that the ECB stays hawkish. One strand of published research notes 10-year Bund yields have climbed back into the upper half of their conflict-era range as risk repricing spread globally. Others point to higher oil forcing markets to price tighter policy, leaving nominal Bund yields exposed to new highs given already-elevated real rates. Euro area yields rose more than 10 basis points across the curve, and the research consensus attributes this to shifting central bank expectations rather than a technical blip. Swap markets are increasingly pricing a September ECB hike.
Peripheral and semi-core spreads are also flagged as vulnerable. Italian spreads over Bunds are seen as particularly sensitive to energy and geopolitical shocks. French OATs face a dual risk in the research: near-term political and fiscal strain, plus the April 2027 presidential election as a medium-term catalyst for further spread widening, with France's roughly 0.8% premium already elevated.
Multiple research desks see 10-year Bund yields holding firm or pushing toward the 3% area in H2.