Fixed Income Blog: Raising the bar

Research evidence excerpt

Fixed Income Blog: Raising the bar

Deutsche Bank

Research

Rates Date

Fixed Income Blog 14 May 2026

Raising the bar

Francis Yared

In our 2026 outlook, we expected a mild sell off in UST and EUR bond markets, Strategist

with the 10y US Treasury reaching 4.45% and the 10y Bund reaching 3.10%. Our +44-20-754-54017

forecast reflected structural and cyclical factors supporting higher yields,

tempered by the risks and uncertainties associated with AI. Six months on, the Matthew Raskin

Strategist market is currently trading close to our forecast, and our short UST 10y position is +1-212-250-1741

through its indicative target. Given the upside risks to our forecast, we maintain

the short UST10y position and raise the indicative target and stop. However, given Steven Zeng, CFA

the uncertainty around the Iran war, we prefer to wait before formally updating our Strategist

+1-212-250-9373 yield forecast.

Initial rationale and risks Andrew Fu

Strategist

Our higher yield forecast was driven by both structural and cyclical +1-212-250-1743

considerations. From a structural perspective, equilibrium interest rates are likely

to be meaningfully higher than in the post GFC period, as the global Ioannis Sokos

supply/demand balance of savings is shifting. The expected evolution in the Strategist

+44-20-754-75680 supply/demand of bonds also creates further upside for global term premia. From

a cyclical perspective, we expected the global economy to transition from the Markus Heider

negative impact of previously tight monetary policy and tariffs to the positive Macro Strategist

impact of a global fiscal impulse and monetary policies that are unlikely to be +44-20-754-52167

restrictive. At the time, we identified three main sources of risk to our forecast:

Soniya Sadeesh