European government bonds are under pressure, with most published research pointing to higher yields ahead — and therefore lower bond prices.
The dominant view across recent analyst research is that the ECB is nearly certain to hike at Thursday's meeting, with sticky energy-driven inflation and a resilient eurozone economy supporting further tightening. One camp sees two more hikes priced over the next twelve months. A more structural argument gaining traction holds that Europe's neutral interest rate is being repriced into a 2.5–3.0% range — a regime shift from the 2% era, driven by energy shocks, German fiscal expansion, and AI-linked productivity.
France is flagged as particularly exposed: some recently published analysis argues fiscal deficits will force investors to demand more compensation to hold French debt, though a tactical thread sees the France-Germany spread narrowing near-term ahead of the French budget.
The contrarian note: a minority view suggests yields could actually dip just after the ECB meeting if no fresh hike commitments emerge, since a hawkish path is already heavily priced.
Bunds get a nuanced read — structurally bearish on bond prices, but with a tactical rally possible if Ukraine or Middle East peace progress materialises.