Euro rates may need to rise more to attract demand in 2026

From think.ing.com

Markets did well to absorb the first wave of issuance in January, but our analysis suggests rates may have to rise further. In 2026, we face a record-high €930bn net supply of European government bonds. Government issuance accounts for around €550bn in 2026, whilst the European Central Bank’s Quantitative Tightening (QT) programme is expected to add another €380bn of supply for the market to absorb. We estimate the price-insensitive demand for government bonds to be around €700bn, which leaves €220bn to be absorbed by more price-sensitive buying. Banks will continue to be the biggest price-insensitive ... (full story)