European rates look set to grind higher, according to a growing body of published research pointing to hawkish central bank signalling and unresolved fiscal risks across the bloc.
Researchers note Bund yields have pushed back above 3.23%, as firmer US inflation and higher Treasury yields spill into European markets. One camp of analysts argues the ECB's stance remains persistently hawkish, with Isabel Schnabel expected to reinforce that tone at Jackson Hole. The published consensus sees a September 2026 hike almost fully priced into euro forward curves and another priced by February 2027, driven by sticky inflation and elevated energy costs. Several recent analyses also flag the 10 September ECB meeting as a likely moment for further tightening, with policy still described as only mildly restrictive.
France is the standout worry: analysts highlight the 10Y OAT-Bund spread widening past 85bp — near the 2024 peak and now wider than Italy's — on fiscal and political risk. A contrarian thread also warns euro corporate credit spreads could widen if equity or tech volatility picks up.