Summer interrupted

Research evidence excerpt

Summer interrupted

FICC Research

Interest Rates

9 July 2026

Euro Area: Rates Strategy

Fresh US-Iran hostilities jolted EUR rates, with the near-term

risk that geopolitics stays in the driving seat as euro area

dataflow remains light next week. We exit our long in the Max Kitson +44 (0) 20 3134 1456

belly of EUR 2s5s10s at a small profit. We also update our EUR max.kitson@barclays.com

swap positioning indicators, and discuss OAT buybacks. Barclays, UK

Alessandro Di Spirito

+44 (0) 20 3555 0515

We appreciate your 5-star vote in the 2026 Extel Global Fixed-Income Research Survey in the alessandro.dispirito@barclays.com

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Pratham Hukmat Kingar

+91 (0) 22 6175 2018A jolt from the summer slumber. Over the past week, European rates have once again found

prathamhukmat.kingar@barclays.com

themselves abruptly at the mercy of geopolitics, with energy prices pushing sharply higher on

Barclays, UK

renewed US-Iran hostilities. Against this backdrop, ECB hike pricing has ratcheted quickly

higher: at the time of writing, c.41bp of hikes are priced by March 2027, versus c.25bp at the Rohan Khanna

+44 (0) 20 7773 0533start of the week. To our mind, the scale of the repricing probably partly reflects investor

rohan.khanna1@barclays.com

positioning, which was likely skewed to the long side at the front-end prior to this week’s events

(as the US-Iran de-escalation had pushed energy prices closer to the ECB's milder scenario). Few

ECB Governing Council speakers have spoken publicly since the re-escalation of hostilities, but

Bundesbank governor Nagel noted on Wednesday: “Now we are, I would say, back where we

started… Is there a probability that we have to hike more? Maybe.