European government bond yields look set to keep drifting higher, according to research published this week — and there's little relief on offer across the region's fixed income complex.
The published research consensus points to two reinforcing pressures. First, monetary policy is still normalising away from historically low rates, with the ECB's deposit facility rate already lifted and policymakers holding a hawkish stance. Analysts note that further tightening has not been ruled out if inflation pressures prove sticky, with elevated energy prices and geopolitical risk cited as key upside threats to the near-term inflation outlook.
Second, supply is climbing. Researchers argue that wider deficits and heavier debt issuance across European governments are adding to the pressure on yields, independent of what the central bank does next.
No specific calls on Bunds, BTPs, OATs, or euro credit spreads were offered in the material reviewed — the through-line is simply a broadly bearish tone for European fixed income.