European bond yields pushed sharply higher this week as researchers coalesced around a hawkish ECB path and a broad developed-market repricing.
Strong September PMIs, broadening services price pressures, and hawkish rhetoric from ECB officials led multiple research teams to argue markets should now discount nearly four additional ECB hikes over the next twelve months, with some flagging risk of five or six. A contrarian thread expects a back-to-back hike as soon as October, driven by energy-led inflation. The Bund 10Y was seen probing 3.6%, with analysts linking the move to global rate correlations, including spillover from rising US yields tied to AI-related financing needs.
Peripheral and semi-core spreads widened. Several teams flagged the French OAT-Bund gap at levels not seen since the euro-zone debt crisis, citing fiscal slippage, election risk, and downgrade concerns, with further widening viewed as the base case into H1 next year.
One structural counterview argued EU joint-issuance bonds should tighten toward core over time as their safe-asset status deepens.