Our research

Rates Outlook 2027: Steeper roads ahead

We expect a steeper Bund curve in 2027, with lower front-end yields as ECB easing is repriced, while higher supply and term premium pressures keep ultra-long yields elevated. Spain and the Netherlands have a more supportive outlook than France, Italy and Belgium, reflecting stronger fundamentals and/or more favourable supply dynamics. We expect US curve steepening, primarily in 2s10s, as eventual Fed easing supports the front end while fiscal concerns, large refinancing needs and a elevated term premium limit longer-end yields declines. The Dutch pension transition should reinforce 10s30s steepening and 30Y swap-spread widening, as hedging demand shifts away from the ultra-long end. Overall, we expect yield declines to be concentrated at the front-end, alongside curve steepening in UST 2s10s, Bund 2s10s/10s30s and EUR IRS 10s30s.

More billions for renewable energy, but the electricity grid remains a constraint

Many of the EU’s ambitions require substantial investment. This analysis focuses on the trend in investment in renewable energy, in both the short and long term. To put the picture into perspective, we first examine investment dynamics in the European Union (EU) and how investment in renewable energy compares with investment in the energy transition. The EU has set itself a legally binding target for renewables: by 2030, at least 42.5 per cent of final energy consumption must come from renewable sources, such as wind, solar and hydro power, biomass and geothermal energy. We examine how much scope remains for each EU Member State to meet the EU targets and which renewable energy sources Europe currently relies on most heavily. Based on an average investment per megawatt, we have estimated the future EU investment required. Finally, for wind and solar energy – for which specific EU targets have also been set – we estimate the additional investment required up to 2030 to ensure these European ambitions are also realised.

US Watch - Data seal the hike, not the jumbo

Strong October payrolls and another firm core CPI print settle the case for a December hike. They do not make the case for the 50bps move Governor Waller has put on the table. Wages are not chasing prices, long-term expectations remain anchored, and the energy shock behind the headline is fading. Our base case remains a 25bps hike on 9 December.

Energy Outlook 2027: Rebalancing the system

Energy markets enter 2027 with depleted inventories, disrupted trade flows and persistent supply constraints. This outlook examines crude oil, European gas and refined products, assessing how recovering supply and new capacity could ease prices during the year. While we expect market normalisation, inventory replenishment, refinery repairs and shipping bottlenecks should limit the pace of adjustment. Geopolitical uncertainty and weather remain key risks to the outlook.

FX Outlook 2027: A weak euro in 2027

China - The world alone is not enough

GDP growth in 2026 supported by spillovers from global AI boom, but imbalances have worsened. Ongoing targeted, piecemeal support expected to safeguard GDP growth in 2027. The Six Networks scheme should contribute to a turnaround in investment. Despite hiccups, we do not expect trade relations with US/EU to spiral out of control next year. We expect annual real GDP growth to remain around 4.5% in 2027 and 2028.

US - The energy shock fades, the AI boom doesn’t

Investment will keep driving growth in 2027, consumers keep up as falling inflation lifts real incomes. The energy shocks will fade without second round effects, the AI build-out keeps core inflation elevated. After one last hike in December, the Fed holds through most of 2027 before easing late in the year

Germany - Don’t rest on the economic recovery

The current economic recovery will continue in 2027, primarily due to fiscal impulses in the pipeline. Looking ahead, growth prospects are in line with the potential growth rate of around 0.3 percent. Inflation will remain an ongoing concern in 2027, but its impact will diminish as the year progresses.

The Netherlands - Resilient, but not immune

Solid foundations, the unique position in the semi-conductor supply chain and government spending have helped the Dutch economy withstand another energy shock. Growth is expected to moderate in 2027–28 as higher interest rates and inflation weigh on demand, despite continued support from exports. Inflation will remain persistent, while supply bottlenecks limit the economy’s growth potential.

Eurozone - Resilient, but bruised… alors, encore?

The eurozone weathered another turbulent year in 2026, with the German fiscal expansion and resilient consumers offsetting the latest energy shock, and intense external competitive pressures. Growth to slow in 2027 on tighter fiscal and monetary policy and falling employment, but eurozone resilience should live to fight another year. The ECB’s new president could face some challenging judgement calls next year, not least over France. We expect a pivot from rate hikes to cuts as inflationary pressure eases and growth slows.