Euro rates might have to increase further in 2026 to boost demand

European Bond Market Faces Supply Surge in 2026

After successfully handling the initial influx of bond issuance at the start of the year, markets may soon encounter further upward pressure on interest rates. Projections indicate that in 2026, the net issuance of European government bonds will reach an unprecedented €930 billion. Of this total, approximately €550 billion will come directly from government borrowing, while the European Central Bank’s ongoing Quantitative Tightening (QT) is anticipated to contribute an additional €380 billion in bonds for investors to absorb.

Our research suggests that demand from buyers who are less sensitive to price changes will total about €700 billion. This leaves a gap of €220 billion that must be filled by investors who are more responsive to price movements. Banks are expected to remain the primary source of this stable demand.