At Any Rate European Rates: January supply and technical drivers in Euro area rates, UK rates update
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Jan 9, 2026 Aditya Chordia, a Euro area issuance specialist, shares insights on the record €1.46 trillion gross issuance forecast for 2026, driven by German increases. He discusses the implications for German yields, suggesting they’ll remain range-bound. Khagendra Gupta, a rates analyst, illuminates the seasonal uptick in corporate issuance and its effects on swap spreads, while highlighting the impact of Dutch pension transitions on the swap curve. They also touch on the Bank of England's easing outlook amid a hawkish tone.
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Record Euro-Area Issuance, But Strong Demand
- Euro-area gross issuance will hit a record ~€1.46tn in 2026, driven mainly by higher German issuance and EU supranational bonds.
- Demand should remain strong and issuers will use diverse tools to manage market impact.
Range-Bound German Yields, Attractive Long-End
- 10-year German yields are expected to trade range-bound near 2.70–2.90% in the near term with limited room for a large rally or sell-off.
- Current long-end levels are attractive for medium-to-long-term investors to lock in carry.
Be Selective Chasing Carry
- Be selective when chasing carry in intra-EMU spreads because valuations are already tight and positioning is overt.
- Use a tactical approach to pick carry opportunities rather than broad bets.