The US curve is expected to steepen, with positive growth surprises supporting an upward trend in euro rates. Despite fluctuations, inflation is projected to hit 4% in the second half of 2025, impacting long yields and potentially leading to a steeper curve. In contrast, the eurozone’s economic data shows signs of recovery, warranting a bearish view on euro rates. With improving data and reduced uncertainty from a potential US trade deal, euro rates are stabilizing, reflected in low volatility measures. US developments remain a key risk factor to this outlook.

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