Societe Generale rates strategists say 2027 budget negotiations are a key risk
for the euro-area government bond market. Talks could refocus investors on
fiscal strains and political uncertainty in countries such as Italy and Spain;
the strategists recommend remaining short French sovereigns and modestly long
Italian and Spanish sovereigns. Euro-area yields are near recent highs but
remain within Societe Generale’s forecast range. They cite ongoing geopolitical
risks, elevated oil and gas prices, rising sovereign debt, an expected pick-up
in bond supply and the prospect of increased political uncertainty after the
summer recess as additional headwinds.
