Published research this week points in one direction on European bonds: yields are heading higher.
Multiple research desks now expect one more ECB rate hike before year-end, with some pinpointing the September meeting. The driver is sticky underlying inflation compounded by elevated European natural gas prices feeding into inflation expectations.
One strategic forecast making the rounds sees the 10-year Bund yield climbing from roughly 2.6% today to 3.5% by Q3 2026, underpinned by eurozone inflation running at 2.8–3.3% and firmer growth.
On the inflation side, a separate research thread argues front-end euro area inflation breakevens look modestly cheap — energy pressures should keep headline inflation prints sticky through 2026. The suggested expression is a 2s5s breakeven flattener.
The nuance worth flagging: intermediate euro area inflation is expected to underperform its US equivalent further out the curve. Analysts attribute this to ECB credibility keeping the belly and long end better anchored than in the US — a curve-shape observation, not a contradiction of the bearish nominal view.