Global Strategy "Rates and risk after 60 bps real rate move in 60 days" De Bock

Research evidence excerpt

Global Strategy "Rates and risk after 60 bps real rate move in 60 days" De Bock

Global Research

20 May 2026ab

Global Strategy Global Strategy

GlobalRates and risk after 60 bps real rate move in 60

days Reinout De Bock

Strategist

reinout.de-bock@ubs.com

+44-20-7567 0152

US 5y real yields shifted 60 bps higher in 60 working days Mustafa Oguz Caylan

We have been writing that higher yields and bear flattening have been the path of least Strategist

resistance for markets as policymakers have turned cautious on not just asset purchases mustafa.caylan@ubs.com

+44-20-7901 5203

but also forward guidance, and will need time to digest the ongoing energy supply

shock. Meanwhile UBS economics is expecting US q/q growth of 2.5% saar in Q2. US 1y Benjamin Jarrett

inflation in 1y trades at 2.68% y/y vs 2.30% y/y in the euro area. US equities are up Strategist

7% vs 3% in Europe year-to-date. So it's maybe not that surprising that investors have benjamin.jarrett@ubs.com

+44-20-7567 5430

recently reassessed both their outlook for US 1y1y rates but also where US 5y real rates

may land (Figure 11y1yOISSwaps and Figure 2Month-to-datenominalandrealmovesinMay'26sofar). US 5y real yields have now shifted 60 bps higher in 60 Bhanu Baweja

working days. Strategist

bhanu.baweja@ubs.com

+44-20-7568 6833

Lessons for rates and risk from previous episodes

We identify 16 episodes with similar increases in US 5y real rates and the key takeaway

from these episodes is that further large moves may lie ahead (Figure 8Coreratesandriskasetsaftera60bpsmovehigherinUS5yrealratesin60days and charts

below). Fading large moves has worked well except during the Global Financial Crisis in

2008, during the taper tantrum in May 2013, and in 2022-23, when the market took

real rates higher still.