Global Strategy "Rates Map - Re-anchoring real yields higher" Caylan

Research evidence excerpt

Global Strategy "Rates Map - Re-anchoring real yields higher" Caylan

Global Research

30 June 2026ab

Global Strategy Global Strategy

GlobalRates Map - Re-anchoring real yields higher

Mustafa Oguz Caylan

Strategist

Soft US jobs report could break the momentum of real rate pricing mustafa.caylan@ubs.com

+44-20-7901 5203

We look to fade the rapid re-pricing of front-end real rates by going long 5y US real

yields and 2s10s steepeners in our US Mid-Year Outlook. We think Thursday's US jobs Phoebe White

report, (UBSe +80k, consensus +110k), could be the catalyst to break the momentum of Strategist

higher real rates. Our US Economics team has been on the right side of the consensus phoebe.white@ubs.com

+1-212-713 2130

number consecutively since February. A hawkish Fed and stronger-than-expected

economic data have seen real rates continue to re-price higher since we first wrote Reinout De Bock

about it back in the end of May. The stage of the monetary policy cycle heading into Strategist

March has had a large role to play: the cuts expected from the Fed were pushed out reinout.de-bock@ubs.com

+44-20-7567 0152

before steepening in the front-end of the yield curve. We think it will take some time

before any debate around easing of policy even as oil prices have normalised. Bhanu Baweja

bhanu.baweja@ubs.comUS Rates Mid-Year Outlook: higher forecasts, value in steepeners and real yields

+44-20-7568 6833

Our new US yield forecasts see yields higher mostly in the front end. We see the 2y and

10y at 3.95% and 4.35% by year-end from 3.63% and 4.25% respectively. Softer labor

market and inflation data should drive front-end yields lower in coming months.

Steepeners in 2s10s is our preferred expression rather than going outright 2y yields for

now.