EUR Rates Forecast Update: Shock Management

Crédit Agricole CIB forecasts a Q4 2026 ECB policy pivot, expecting anchored front-end rates but curve steepening due to global term premium expansion. European government bonds are expected to outperform G10 peers on a volatility-adjusted basis.

Key Takeaways

• 1.The ECB is expected to deliver a June hike followed by a shift toward more explicit optionality, which markets are likely to view as dovish.
• 2.An orderly pivot is forecast for Q4 2026, leading to a decline in implied volatility.
• 3.While the front end of the curve is anchored, the long end is exposed to global term premium expansion, particularly from US fiscal stimulus and Fed policy.

Table of Contents

• EUR rates forecast update: shock management
• Manageable supply shock means the front end of the EUR curve is well anchored
• Conclusion
• Interest Rates Research advanced tools
• Red Mount Analytics
• Global Markets Research contact details

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