European sovereign yields look set to keep grinding higher, according to the bulk of research published this week — with almost no dissent on direction across Bunds, French OATs, and the broader eurozone curve.
The reasoning across recent analyst notes is strikingly consistent. One camp of researchers points to a structural shift: massive capital demand for AI infrastructure, defense, and fiscal expansion is now competing with sovereign debt for funding, keeping long-end yields elevated. Others emphasize sticky energy and food inflation, heavy post-summer bond issuance, and continued ECB hawkishness. A broader thread frames the move as a global repricing for a more uncertain world, citing geopolitical risk and unsustainable fiscal paths in both France and Germany.
The published consensus flags German 30Y Bund yields at levels not seen since 2011 and French 30Y OATs back at 2008 highs, with more upside argued from here. Some analysts expect sharp Bund volatility over the next three to five years as Germany's debt load climbs.
One contrarian relative-value view stands out: a small camp argues Italian BTPs should outperform Bunds, expecting the Italy–Germany spread to tighten as Rome holds fiscal discipline while Berlin loosens. Meanwhile, the French OAT–Bund spread is widely expected to widen into 2027 on French political and fiscal risk.