European Rates Watch: EGB views and fair values

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European Rates Watch: EGB views and fair values

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European Rates Watch

EGB views and fair values

Core: Favour front end, and Finland vs Austria 14 May 2026

We see risks of reduced demand from long-end investors, which can become a point of Rates Research

concern if Dutch pension funds decrease their exposure. This is however counteracted to Europe

some degree by a reduction in long-end issuance. Front-end demand from reserve European Rates Research

managers may prove supportive as the pool of AA-AAA rated sovereigns has shrunk. MLI (UK)

With regards to fiscal developments, we expect Finland to outperform Austria long-term. Edvard Davidsson

Rates Strategist

Trade: Long Finland vs Austria 13 May. MLI (UK) edvard.davidsson@bofa.com

Sphia Salim

Rates StrategistSemi-core: Fiscal and budgetary concerns MLI (UK)

Political risks in France later this year and insufficient fiscal consolidation in Belgium sphia.salim@bofa.com

leaves us cautious on semi-core in the short term, despite some relative cheapness See Team Page for List of Analysts

(Exhibit 2). Rating downgrades are expected to lessen reserve manager demand, while

support from domestic banks may be more limited from here on. Long-end investors For a list of all our open trades and

may on the contrary prove more supportive, given the attractive outright yield levels. trade closed over the past 12

Peripherals: Mixed bag, we favour Greece months, see latest Global Rates Weekly.

In Italy, we believe concerns over debt-sustainability in Italy may resurface if growth

weakens while yields remain elevated. We would not fade the current cheapness of BTPs

that appears in the cross market PCA (Exhibit 2), especially as the vol-adjusted carry in

Italy is lowest across the main names considered (Exhibit 3).