French sovereign stress is dominating European bond research this week, with most published views pointing to wider spreads and higher French yields.
The core worry, according to several research notes, is France: budget strain, social unrest, and political risk heading into elections, with a sovereign review landing Friday. One camp of analysts flags the OAT-Bund spread already near its October high around 157-159bp, with French 10-year yields pushing toward 5% and room to blow wider without a policy signal. A particularly bearish thread warns of a euro debt crisis worse than 2012, favoring shorter-duration French and Italian exposure while staying constructive on Spain and Germany.
Euro credit views are more upbeat. The published consensus is that investment-grade spreads can tighten through 2027 as net supply eases to roughly €126bn, with all-in yields near 4.5% keeping demand firm.
On rates, some recently-published views see a possible ECB deposit hike in late 2026 on sticky inflation, which would lift the Euribor path.
A contrarian note argues the France-Germany spread eventually narrows — but only if reforms actually arrive.