European bond yields pushed higher across the week, with research pinning the move on energy-driven inflation, hawkish ECB repricing, and mounting fiscal anxiety in France.
German 10-year Bund yields climbed toward 3.4%, and one published year-end forecast was nudged up to the 3.5% area, citing sticky core inflation, heavy sovereign supply, and a rising term premium. Most analysts now expect at least one more ECB hike in December, taking the deposit rate to 2.75%, though views on the terminal rate diverged sharply — some see 3.00–3.25% as reasonable, while others argue market pricing near 3.50% overshoots what inflation data and ECB communication justify.
France was the standout weak spot. The OAT-Bund spread punched above 100bp — the widest since 2012 — with one house flagging 120bp as a plausible next stop on fiscal slippage and 2027 election jitters.
A contrarian thread noted that short positioning in Bunds looks crowded, leaving room for a tactical yield pullback if the consensus trade unwinds.