Bank of France: The oil shock confirms Societe Generale's bearish view on German government bonds.

The interest rate strategist at Societe Generale in France stated in a report that the oil shock stemming from the Middle East conflicts is consistent with their bearish view on German government bonds in 2026. They are maintaining their year-end target of 3.25% for yields and said, "Even though the highs may be reached earlier than expected." They added that term premium - the extra yield investors seek for buying long-term bonds instead of short-term bonds - is continuing to rise. Regarding eurozone government bonds, if net selling pressure does not intensify, this should provide some support. "Ultimately, the direction will be determined by the trends in commodity markets and interest rate fluctuations." According to data from the London Stock Exchange Group, the yield on 10-year German government bonds closed at 2.944% on Thursday, briefly touching a near two-and-a-half-year high of 2.963% intraday.