Liquid Insight: Occam’s razor applies in rates

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Liquid Insight: Occam’s razor applies in rates

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Liquid Insight

Occam’s razor applies in rates

Key takeaways 12 May 2026

Rates and Currencies Research• Global yield curve moves dominated by repricing of central banks

Global

• Repricing of central banks does not account properly for initial conditions and

differences in energy dependence

Global Rates & Currencies Research

• US rates are rich, EU rates are cheap, UK front-end underprices inflation persistence, MLI (UK)

BoC unlikely to hike as much as priced Ralf Preusser, CFA

Rates Strategist

MLI (UK)

By Ralf Preusser +44ralf.preusser@bofa.com20 7995 7331

Chart of the day: Not enough priced in US, too much priced in EUR, wrong price elsewhere Oliver Levingston

Change in 1m forward rates vs spot in bp across EUR, USD, GB, AUD and CAD FX and Rates Strategist Merrill Lynch (Hong Kong)

100 +852oliver.levingston@bofa.com3508 4631 EUR USD GBP AUD CAD

75 See Team Page for List of Analysts

25 Liquid Insight

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balance Source: BofA Global Research

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regular procedures, irregular

Global bond yields driven by central bank expectations budgets 06 May 2026

Much has been made of the increase in long-term bond yields and the extent to which 5-May-26 Dollar on mute

4-May-26 ECB balance sheet update

this can be explained by bond vigilantism and concerns of fiscal dominance. Instead, we 30-Apr-26 RBA preview: Front-loading as

show that most of the repricing in global yield curves can be explained by the repricing the path of least resistance

of central bank reaction functions.