European bond yields look set to grind higher, according to the bulk of this week's published research — bearish for Bund, BTP, and broader Eurozone government bond prices.
Researchers point to higher oil prices feeding into near-term inflation as the main catalyst pushing nominal rates up, especially at the short end. One published forecast sees the German 10-year Bund yield rising from 2.5% to 3.4% by Q3 2026, with Italian BTP 10-year yields following a similar path over the next 12 months, on the view that ECB rate cuts will be slow and Italian risk premia sticky.
A separate strand of analysis flags structural headwinds for Bunds: rising German borrowing needs, ongoing central bank balance sheet shrinkage, and reduced Japanese buying of foreign bonds. On that view, Bunds are not cheap and face continued selling pressure. Some recently-published work goes further, arguing the next ECB move could be a hike rather than a cut.
One contrarian scenario: if France's National Rally sweeps both presidency and parliament in 2027, analysts warn French-German spreads could widen sharply on fiscal concerns.