European sovereign yields look set to keep pushing higher, according to research published this week — with long-dated German Bunds and French OATs already at multi-year peaks that spell pressure on bond prices.
Researchers argue the move in 30-year Bund yields (now at post-2011 highs) and 30-year OAT yields (at post-financial-crisis highs) reflects something structural: rising government debt, persistent deficits, and a global repricing of long-duration sovereign risk that's been building since 2022. With little political appetite for austerity anywhere in the developed world, the published view sees no easy tactical reprieve.
On the short end, analysts point to ECB board member Isabel Schnabel's clear signal that rates need to go higher. Markets are now nearly fully pricing a 25bp September hike, dragging 2-year eurozone yields up into the meeting.
One contrarian bright spot: a recently-published view on Hungary sees 10-year yields falling toward 4.75% by year-end, helped by the central bank's rate cut and a more positive EU accession story.