European sovereign bond spreads look set to widen further, with French, Italian, and Greek debt under pressure versus German Bunds — and published research this week is remarkably aligned on why.
The dominant theme is French fiscal credibility. Multiple research notes point to skepticism over France's budget math, with the country's independent fiscal watchdog flagging implausible deficit targets, markets doubting growth projections, and the 2027 presidential election adding political risk. Several analysts argue the stress is already spreading to Italy and Greece, with Italian spreads potentially drifting toward 250bp over Bunds as contagion — not an idiosyncratic credit story.
On Bunds themselves, one camp expects yields to grind higher into year-end on sticky energy-driven inflation and further ECB tightening, while the same strategic view sees yields eventually falling once ECB easing begins around end-2027. A separate thread notes rising eurozone yields are quietly doing some of the ECB's tightening work. A contrarian flag: Romanian bonds could sell off if S&P downgrades.