JPMorgan sees Greece and Spain as the most attractive carry opportunities, citing their relatively higher spreads over Germany and the prospect of stable returns with limited risk.
JPMorgan’s strategy for Greece includes overweight positions in 10-year bonds relative to Spain, as well as trades that reflect expectations of a steeper yield curve at the front end and curve-flattening strategies at longer maturities.
Short- and medium-term Greek bond issues remain more attractive from a carry-to-risk perspective, the bank said, supported by the shape of the credit curve and a relatively low volatility profile.
By contrast, countries such as France, Italy and Belgium offer a less compelling risk-return profile, prompting the bank to recommend trading their spreads on a more tactical basis.
JPMorgan urged a tactical and selective approach to euro zone government bonds, noting that spreads within the currency bloc have traded in relatively narrow ranges since late November, while warning that scope for further compression is limited.
As a result, the bank said investors should adopt a tactical stance and be selective in the first half of 2026, particularly when choosing carry trades — returns generated from interest rate differentials among euro zone sovereigns.
The investment bank expects the euro zone economy to grow by 1.2% in 2026, with inflation easing to 1.9%, the bank said.
For Greece, it forecasts economic growth of 2.2% next year, with inflation seen at 2.3%. However, the bank also projects unemployment at 8.2% and a current account deficit of 6.4%.
Greece’s public debt is expected to stand at 142% of gross domestic product in 2026, according to the bank’s estimates.
