The two anomalies of the euro-zone yield curve

We do not believe the euro-zone yield curve is steep enough at the long maturities, for two reasons: In the long term, inflation is likely to be higher than expected, due to the effect of increasing wealth on demand, population ageing and the energy transition; In the medium term, the persistence of structural fiscal deficits in the euro zone as the ECB stops buying government bonds will be the second factor driving up long-term interest rates. While interest rates are going to remain low for a few years, it is therefore likely that they will then rise more than currently expected.