European bond yields are biased higher, with published research pointing to a near-certain ECB rate hike in September as the catalyst.
Researchers argue that rising eurozone inflation expectations — driven largely by energy prices — have pushed markets to price roughly a 90% probability of an ECB hike next month, lifting sovereign yields and widening peripheral spreads ahead of euro area GDP data. Another strand of recent analysis reinforces that view, citing a healthy Q2 GDP reading alongside hotter-than-expected inflation prints from Spain and Germany as reason for the ECB to keep tightening. The ECB itself has warned that the full pass-through from energy prices to inflation has yet to play out. A further published view expects a September hike and flags the possibility of another move in December if energy pressures persist.
On the technical side, one recently-published note highlights a bearish pattern in Bund futures with new resistance around 124.74, implying near-term downside for Bund prices — meaning higher yields.