Global Strategy "Taking Stock with De Bock - Client views from NY/Canada..."

Research evidence excerpt

Global Strategy "Taking Stock with De Bock - Client views from NY/Canada..."

Global Research

19 June 2026ab

Global Strategy Global Strategy

GlobalTaking Stock with De Bock - Client views from

NY/Canada Reinout De Bock

Strategist

reinout.de-bock@ubs.com

+44-20-7567 0152

Cold turkey central banking

UBS sales had arranged our client schedule so that we were heading back to NY from

Connecticut right as Fed Chair Warsh started his first press conference. There was

something almost cinematic about it - driving down the highway as monetary policy was

being reset on a meeting-by-meeting rhythm. The chair signalled his willingness to move

away from the gradualist orthodoxy that has defined the Fed since the Bernanke era. Mr

Bernanke himself gave us the conceptual vocabulary for this alternative - "bang-bang

solution" or "cold turkey strategy."The Bernanke Fed delivered stability in medium to

long-term policy rate expectations. In past months, I have been arguing that the likely

shift away from gradualism could lead to a structural pick-up in the volatility of short-

term rates, a flatter US 5s30s curve and a disinflationary impulse (see Warsh vs Bernanke

Fed - More volatile rates ahead? (28 April))

Maradona (1986), July FOMC at 10 bps, and flattening pressures

The UBS rates strategy team has been running short SOFR 2y and 10y versus long 7y and

short 1y1y USD vs SEK - trades that have been performing lately (Figure 1OpenTrades). There is now

almost 10 bps priced for the July meeting.

But the deeper conversation with clients is if the Fed but also ECB or BoE actually have to

deliver all the tightening priced or will the mere hint that more meetings could be live

tighten financial conditions sufficiently so that fewer hikes will have to be delivered to

return to targets.