Global Strategy "Rates Map - The real message of global yield curves" De Bock

Research evidence excerpt

Global Strategy "Rates Map - The real message of global yield curves" De Bock

Global Research

18 May 2026ab

Global Strategy Global Strategy

GlobalRates Map - The real message of global yield

curves Reinout De Bock

Strategist

reinout.de-bock@ubs.com

+44-20-7567 0152

Less central bank gradualism and higher energy prices have a real cost Mustafa Oguz Caylan

Higher yields have been the path of least resistance for markets as policymakers have Strategist

turned cautious on not just asset purchases but also forward guidance and will need mustafa.caylan@ubs.com

time to digest the ongoing energy supply shock. Globally traded liquid bond markets are +44-20-7901 5203

sending a relatively consistent message, even if the market may be underestimating Bhanu Baweja

cross-country differences in economic impact and central bank reaction functions Strategist

(Figure 4Globalytradedliquidyieldcurves-Japanre-joinsthepeloton). Last week, 10y rates rose even more than 2y rates, in a break with the bhanu.baweja@ubs.com

underperformance of 2y bonds seen since the Iran conflict started. Investors want higher +44-20-7568 6833

yields to hold duration risk. This is in line with Bernanke's view that a gradualist

approach to monetary policy "may increase the ability of the Fed to affect long-term

rates and thus influence economic behaviour." A less gradualist approach in favour of

what Bernanke has called a "cold turkey" approach would then lead to higher long-

term rates and more volatility.

Japan re-joins the rates peloton and SNB pricing went to two hikes

Last week was a reminder that Japan has returned as an important driver to global bond

markets (Figure 4Globalytradedliquidyieldcurves-Japanre-joinsthepeloton). A total of 29 bps of Fed hikes is now priced by the Fed’s March ’27