Investors including Allspring Global Investments, CG Asset Management, and RBC BlueBay Asset Management are positioning for European and UK yield curves to steepen, arguing that market pricing for interest rate hikes has become too aggressive. A global bond selloff driven by surging energy prices has flattened curves recently, with swaps pricing four more quarter-point hikes from the ECB and four to five from the Bank of England by end of 2025. Lauren Van Biljon, senior portfolio manager at Allspring, maintains an overweight in two- to five-year government bonds, stating "pricing on interest rates looks too hawkish." CG Asset Management's Emma Moriarty has bought one- to five-year gilts, citing the UK's weak growth outlook.

RBC BlueBay's Mike Bell is running a UK steepener trade, saying four BOE hikes "is too aggressive." Fidelity International's Mike Riddell has cut long-dated debt in the UK and Italy, preferring front-end steepeners. However, recent losses on steepener trades — the German and UK 5s30s spreads hit their narrowest since early 2025 — have made investors cautious. BNP Paribas' Camille de Courcel notes "many people have been caught on the wrong side" and warns a terminal ECB rate of 3.5% cannot be ruled out.

ING's Michiel Tukker favors steepeners long-term but awaits lower oil volatility.