The Fixed Income Digest: Agg alpha: May ’26, overweight credit

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The Fixed Income Digest: Agg alpha: May ’26, overweight credit

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The Fixed Income Digest

Agg alpha: May ’26, overweight credit

Agg rebalance views: IG credit overweight 20 May 2026

We offer fixed income views ahead of the month end portfolio rebalancing. Our views: United States

duration = short, curve = 25s flattener/ 5s30s steepener, mortgages = neutral, credit

Securitized Products Strategy

= overweight. Overall, investors should favor IG spreads over duration. Valuations and Chris Flanagan

rate vol risks keep us wary of MBS spreads that active managers have favored. We FI/MBS/CLO Strategist

BofAS

recommend they close these overweights. christopher.flanagan@bofa.com

Duration: short bias JeanaMBS StrategistCurro

Pay 2y rates with hike risk underpriced given high inflation & solid growth. See report: BofAS

Global Rates Weekly. – M. Cabana, M. Swiber jeana.curro@bofa.com

Ge Chu, CFA

MBS StrategistCurve: own 5s on curve BofAS

We recommend 2s5s flattener with more room for hikes to be priced. We are also in ge.chu@bofa.com

5s30s steepener on long end supply/ demand concerns & more persistent inflation Rates Research

concerns. This puts us long 5s on curve. – M. Cabana, M. Swiber Meghan Swiber, CFA Rates Strategist

Mortgages: back to basis neutral on range breakout BofASmeghan.swiber@bofa.com

We turned basis neutral from overweight on 5/15 as rates uncertainty rose and 10y UST Mark Cabana, CFA

broke above 4.5%, raising basis widening risk. See report: Agency MBS weekly. Rates Strategist

– J. Curro, G. Chu mark.cabana@bofa.com

Credit Strategy

Yuri SeligerIG credit: overweight on fundamentals & technicals

Credit Strategist

Strong earnings, firm demand, and lower supply in 2H drive our overweight BofAS

recommendation. See report: IG Credit Strategist.