Crédit Agricole Corporate & Investment Bank
June 2, 2026
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A geopolitical risk-off event has led to a bear flattening of EUR rates, increasing expectations for ECB tightening. Analysts recommend selective curve positioning, specifically Bund ASW steepeners, amidst a heavy week of sovereign bond supply.
Key Takeaways
- 1.Geopolitical risk-off triggered a bear flattening in EUR rates and EGBs, reversing the previous week's rally as ECB tightening expectations rose.
- 2.The report advocates for selective curve positioning, specifically Bund ASW steepening, in an environment of low implied volatility and rich EGB spreads.
- 3.European government bond (EGB) supply remains high this week, with key auctions from France (OATs), Spain (Bonos), and Germany (Schatz) testing market absorption.
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Authors
Riccardo LamiaAlex LiJean-François Perrin
Securities
German Schatz 2.50% 06/28OAT 4.40% 05/57Bono 3.1% 07/31
Themes
Geopolitical RiskECB Monetary PolicyYield Curve Dynamics
Regions
EuropeNorth AmericaGermanyFranceSpain