European government bonds are facing clear downward price pressure, according to research published this week, with Bund yields, French OAT yields, and the France-Germany spread all biased higher.
Analysts tie the move in Bunds to a mix of forces: global sovereign repricing after the Iran conflict and oil-driven inflation, ECB tightening (deposit rate now at 2.50%), and heavy new sovereign issuance to fund defence and the energy transition. That combination has pushed 10-year Bund yields to 3.4%.
On the ECB path, the published consensus expects more hikes — but researchers disagree on how many. One camp argues core inflation staying above the 2% target through 2028 could require three or more additional 25bp moves. A more contained view sees just one further hike in Q4 2026, to 2.75%, as enough.
France is the standout risk. Recent research flags a high debt load, persistent deficits, and political debate around debt cancellation rather than consolidation. French 10-year yields have already climbed 70bp to 4.3%, and with over half of French debt held by foreign investors free to rotate elsewhere, analysts see the France-Germany spread widening into the next election.