ECB Rate Path: Yields Rise Sharply, But Societe Generale Sees Selloff as Overdone

According to Societe Generale strategists, the global fixed income sell-off seen in July appears overextended. The move has been particularly pronounced in Western Europe, where both 2-year and 10-year government bond yields have climbed roughly 30 basis points over a recent short span.

The sharp repricing suggests markets may have become too aggressive in anticipating further tightening from the European Central Bank. The strategists caution that the sell-off looks stretched, implying a potential near-term reversal or at least a pause in the yield surge.

The view aligns with a broader narrative that rate expectations might have overshot, though the ECB's actual policy path remains data-dependent.