Societe Generale: The market will price in two “preventive” rate hikes by the European Central Bank; 10-year German bund yields are expected to remain above 3%.

Golden Ten Data reported on April 10 that Societe Generale rate strategists pointed out in a report that the bank's baseline scenario has been adjusted: the market will price in two "precautionary" rate hikes by the European Central Bank in June and September, while the economy remains resilient. This will keep the 10-year German bund yield above 3%. The strategists stated, "This should ensure that the 10-year bund yield remains above 3% throughout 2026 and prevent a marked inversion of the yield curve." They believe that a ceasefire in the Middle East and a de-escalation of the situation should bring relative stability to the short end of the euro area yield curve, with market expectations for the European Central Bank’s terminal rate stabilizing around 2.50%. "If the bund yield falls below 2.90%, it may present an opportunity to short duration—we still expect the 10-year bund yield to reach 3.20% in the second quarter."