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Top of Mind - UK Politics – PM Starmer resigns, what comes next?
- Macro economy
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UK Prime Minister Starmer has resigned. The decision did not come as a surprise following his rival Andy Burnham’s landslide victory at last Thursday’s by-election. As we said in our Top of Mind webinar, Burnham will almost certainly go on to become the UK’s next prime minister. Indeed, one of his closest rivals Wes Streeting also came out this morning to endorse Andy Burnham, and it is possible that Burnham may become PM unopposed. Other possible challengers such as Angela Rayner and Ed Miliband have yet to explicitly state their stance.
Top of Mind - UK & BoE outlook post-Makerfield
- Macro economy
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Andy Burnham won the Makerfield by-election, and he will now almost certainly go on to enter Number 10 Downing Street. What would that mean for the UK economy and for interest rates? In this Top of Mind call, Bill Diviney takes stock of both the election and Thursday’s Bank of England meeting, with an update on our latest expectation for the economy and monetary policy. Larissa Fritz then discusses the impact on gilt markets, while Georgette Boele discusses the outlook for sterling.
Top of Mind - A new chapter for the Fed
- Macro economy
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Kevin Warsh is about to chair his first FOMC meeting, after being confirmed against a political background. Warsh inherits a difficult policy environment where the US is hit by three concurrent shocks: tariffs, the energy supply shock and the AI investment boom. These shocks put pressure on his ability to pursue his goals. In this webinar, Rogier Quaedvlieg, Larissa de Barros Fritz and Georgette Boele will walk you through their assessment of the Warsh’s likely policy aims, as well as their feasibility given current economic constraints. They will also discuss the potential implications for rates and the dollar.
A new Fed Chair in a more fragile Treasury market
- Macro economy
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Fed Chair transitions have historically been followed by higher Treasury yields, as markets reprice policy uncertainty and the incoming Chair’s reaction function. This post-transition rise in Treasury yields is still yet to materialize. Any repricing under Warsh may be more persistent than in past transitions because he takes over an already fragile Treasury market. Warsh’s preference for lower rates may support the front-end of the curve, but concerns about political pressure, reduced transparency and conviction-based policymaking could keep term premia and long-end yields under upward pressure. Even a gradual reduction in the Fed’s balance sheet would matter for Treasuries, because it raises free float and shifts more duration risk onto investors with less stable demand. Rising Treasury issuance and a worsening fiscal backdrop mean that higher yields increasingly feed back into debt-servicing costs, rollover risk and term premia. The shift away from foreign and official buyers toward more cyclical domestic investors makes Treasury demand less stable, reducing the market’s ability to absorb growing supply without higher term premia.
NGEU - related growth at risk of undershooting
- Macro economy
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The EU remains the single largest issuer in the euro SSA market, having placed more than EUR 160bn in bonds in 2025 and expected to raise another EUR 90bn in the first half of 2026 alone. The core of this issuance has been under the NextGeneration EU (NGEU) programme, with its main instrument being the Recovery and Resilience Facility (RRF). The NGEU was launched in 2021 to provide support following the Covid-19 pandemic, and is now approaching its final year. In fact, all disbursements under the RRF must occur before the year-end, with payment requests by Member States having to be submitted before 31st of August 2026. On the back of this, this note examines RRF fund spending patterns and its effect on GDP by addressing five main questions: 1. How do RRF disbursements stack up against total envelopes? 2. Are Member States expected to receive the remaining funds before the 2026 deadline? 3. Are Member States on track for spending the already received RRF funds? 4. How have EU Member States spent the RRF funds? 5. What will be the impact on growth if EU countries do not fulfil all of their investment plans?
Rates Strategist - Belgium among EU’s most energy-vulnerable economies
- Natural resources
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In light of what is shaping up to be one of the biggest global energy supply shocks in history, the question arises on how exposed EU countries are to potential energy shocks. In this note, we assess such exposure by looking at both dependency—how much nations rely on external sources for their oil and gas—and resilience, meaning their capacity to withstand and adapt to disruptions or price surges. By examining these factors, we can better understand which countries face the greatest risks and which demonstrate stronger ability to cope with sudden changes in energy supply or cost.
Rates Strategist - How do oil and gas shocks impact bond markets?
- Sustainability
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Due to the war in Iran, oil and gas prices have risen significantly since the start of this month, resulting in falling equity prices and rising bond yields across the globe. The way in which both, ECB expectations and the bond market respond to an oil and gas price shock varies depending on the situation (see for example chart below). In this note, we aim to disentangle how different oil and gas shocks impact ECB expectations and Bund yields, based on available academic research. This helps market participants to understand what to expect from Bund curves in the short- and long-term following an oil or gas shock.
ESG Strategist - Utilities poised to boost ESG Bond issuance
- Sustainability
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Euro-ESG bond issuance fell 7% in 2025 compared to 2024. This decrease was driven by regulatory and political shifts worldwide, particularly the relaxation of some criteria to meet the EU’s 2040 targets and the reduction by 90% in companies within scope of the CSRD. Looking forward to 2026, ESG issuance is expected to rise by 14% to EUR 260 bn. Growth will be fuelled by corporate issuance – especially utilities – and sovereign issuers. As for financial institutions, ESG issuance is projected to remain broadly stable versus last year.
ESG Strategist – EuGBs outperform regular green bonds
- Sustainability
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Bonds issued under the EU Green Bond Standard (EuGBs) outperform regular green bonds both in primary and secondary markets, with higher investor demand and stronger pricing performance. On average, EuGBs attract larger orderbooks at issuance and price at lower new issue premia than regular green bonds and other investment-grade bonds issued during the same timeframe, however, this trend is most prominently visible within corporate bond issuers. After issuance, EuGBs experience more significant spread tightening than regular green bonds, especially in SSA and corporate bonds, with EuGBs from banks actually underperforming in secondary market. EuGBs exhibit lower volatility in secondary markets compared to regular green bonds, as measured by the standard deviation of z-spreads. Our findings are constrained by the small sample size of EuGBs issued year-to-date, limited comparability across ratings and sub-sectors, and the inability to conduct more robust statistical analyses.
ESG Strategist – Investigating commonly-cited factors of the greenium
- Sustainability
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Earlier this year, we wrote about how euro investment grade (IG) green bonds exhibit lower volatility and, in most cases, also offer slightly higher liquidity, the latter based on Bloomberg LQA scores, bid-ask spread relationships and relative trading volumes [1]. Our analysis helps to explain the presence of a greenium over time: that is, why investors might be willing to accept a higher price (lower spread) for green bonds in comparison to non-green bonds. In this note, we delve further into the dynamics of the greenium. More specifically, we are interested in understanding the potential drivers of the greenium and if existing research on the topic is still valid when considering more recent data.
