Eurozone rates trade idea Buy 10Y Bund outright

Research evidence excerpt

Eurozone rates trade idea Buy 10Y Bund outright

7 July 2026

Eurozone rates trade idea FixedRates Income

Buy 10Y Bund outright Germany

◆ 10Y Bund yields have risen over 10bp since the end of June Chris Attfield

with the global sell-off in duration European Rates Strategist HSBC Bank plc

chris.attfield@hsbcib.com

◆ This has been driven by risk-on sentiment and boosted by +44 20 7991 2133

heavy issuance – but supply pressure should ease in August Kshitiz Sharma

Associate

Bangalore

◆ With news of the German 2027 budget in the price, we see

value at these levels and open a buy 10Y Bund trade idea

Table 1. Buy 10Y Bund outright

Trade Entry (date) Target Stop 3m C+R Rationale Risk

Buy DBR 2.9% 2.98% 2.80% 3.10% +4bp Attractive levels, supply Global duration

02/36 (7 July 26) pressure to ease, budget weakness

news in the price continues

Source: Bloomberg, HSBC

Since the start of the month DM rates curves have seen selling pressure that has

cheapened 10Y Bund yields by over 10bp (Figure 1). A combination of factors

contributed to the move, notably a risk asset rally and supply pressures which are

particularly heavy in July. The German 2027 budget announcement may also have

contributed to negative sentiment (see German draft budget 2027, 6 July 2026).

We don’t see this selling momentum continuing. Without trying to call a bottom, we

see value at these yield levels: supply pressure should ease going into August, and

we continue to expect no further hikes from the ECB which should eventually give

yields scope to fall. Central bank policy expectations cannot explain the rise in yields,

and we see the rise in oil prices as only a minor contributor. We therefore open a

trade idea to buy 10Y Bunds outright. The risk is that global weakness in duration