European rates look set to keep grinding higher. Published research this week points to rising German Bund yields, EUR swap rates, ECB deposit rates, and front-end euro rates across both short and medium-term horizons.
The main driver: a near-certain ECB rate hike in September. Analysts note market-implied odds have hit 99%, with virtually all ECB speakers signalling the move. One camp of researchers calls it a "foregone conclusion," pointing to Eurozone inflation expected to climb from 2.9% to 3.3%. A recent 5bp Bund sell-off is being tied to a broader global bond rout, driven by hawkish Fed messaging and renewed US–Iran tensions.
Beyond September, the published consensus sees 2–3 more ECB hikes priced through February, with further upside if energy prices stay elevated. A separate thread of analysis flags fiscal slippage — especially in France — as building term premium and steepening the curve.
On specific names, researchers highlight Bund yields at 15-year highs near 3.33%, French OAT yields at levels unseen since 2008, and EUR 10Y swaps close to 3.4%.