Barclays: (strategists including Alessandro Di Spirito)

**Recommends Sept. 2027-Dec. 2028 Euribor flattener given the limited amount of ECB rate cuts priced; the relatively flat structure of the strip once the terminal rate is reached offers good risk-reward even if it takes time to realize; ECB messaging continues to be for a slow but steady hiking cycle where the terminal rate continues to be pushed further out; alternatively, more hawkish premium can begin to embed after the second half of 2027 if the region’s bond market stabilizes and activity proves strong

Citigroup: (strategists including Jamie Searle)

**Recommends receiving Dec. 2026 ECB-dated ESTR given the volatility in OAT spreads may be reaching a tipping point at which the market starts pricing a greater probability of no more hikes for the coming meetings despite the energy spike; it’s not clear what could act as a circuit breaker and restore confidence in OATs by December; the risk of accelerated OAT-bund spread widening is clear and could be sufficient to force the ECB to pause hikes with the deposit rate currently at 2.5%

Goldman Sachs: (strategists including George Cole)

**Raises mid-2027 forecasts for OAT-bund, BTP-bund and bonos-bund to 130bps, 105bps and 55bps from 95bps, 90bps and 55bps previously respectively; OAT yields have dislocated from fundamentals, but episodes of social unrest, ongoing budget negotiations, and energy price pressures are all reminders of a lack of positive catalysts to facilitate a return to valuations consistent with typical macro drivers

Natixis: (strategists including Theophile Legrand)

**Recommends buying 2-year Italy versus ESTR swaps given the spread has returned to the early October peak due to contagion from France and not an Italy-specific development; verbal intervention by the ECB reminding markets that it stands ready to act, and explicitly citing anti-fragmentation tools, would be enough to stabilize the front end of the Italian curve; the tenor limits sensitivity to long-term sovereign risk

SocGen: (strategists including Jorge Garayo)

**Flight-to-quality rally in bunds will offer opportunities to sell; unless term premium compresses on persistent haven buying, German 10-year yields should redirect above 3.40% even if the ECB is seen as stopping rate hikes in December

**Recommends receiving UK 2-year SONIA versus US 2-year OIS given the attractive level and limited scope for a sustained move wider; a further deterioration in AI sentiment, growth expectations should weigh on the UK outlook and market pricing for four BOE hikes over the next year is seen as excessive

UBS: (strategists including Mustafa Oguz Caylan)

**Recommends buying 10-year UK ahead of this week’s budget given expectations for a reduced fiscal risk premium arising from a budget which contains limited fiscal expansion