European bond research is leaning decisively bearish, and the tone across recently published notes is unusually aligned.
Researchers argue that Eurozone government bond yields and intra-euro spreads have further to widen, driven by ECB tightening and sticky inflation. Multiple analyst camps point to energy-driven price pressure as the main catalyst, forcing markets to reprice ECB policy higher. The ECB has already delivered a 25bp hike, with headline inflation projected above target into 2028. The published consensus sees two more 25bp moves taking rates to 3.00% by year-end, and markets are pricing a similar path.
One thread of recent research flags German Bunds as separately exposed to a supply shock from accelerated defence and infrastructure borrowing — a story distinct from inflation. The short end looks most vulnerable: analysts single out the German 2-year as leading the move higher.
At the periphery, researchers highlight widening France-Bund and Italy-Bund spreads. Notably, some recently-published views argue French OAT swap spreads are now more correlated with oil than Italian BTPs — an unusual reversal of the old peripheral pecking order.