Global Rates Viewpoint: Mid-Year: It’s a small world after oil

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Global Rates Viewpoint: Mid-Year: It’s a small world after oil

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Global Rates Viewpoint

Mid-Year: It’s a small world after oil

Key 2H26 themes: energy, US resilience, hikes 25 June 2026

We update global rate views at mid-year. G10 rates markets will be driven by three Rates Research

questions: how strong the US economy is and whether it allows the Fed to hike; how Global

quickly energy markets normalize; and whether other central banks avoid or abort hiking Global Rates Research

cycles if oil prices fall. MLI (UK)

Ralf Preusser, CFA

Rates StrategistForecast changes: world turned upside down MLI (UK)

The main story of 1H26 has been resilient US macro data despite the commodity shock, ralf.preusser@bofa.com

a turn-around in the labor market, and a hawkish pivot by global central banks. BofA Mark Cabana, CFA

economists now expect the Fed to reverse the 2025 insurance cuts and hike three times Rates Strategist BofAS

in 2H ’26 starting in Sept, taking the target range to 4.25-4.50% by year-end. In the UK, mark.cabana@bofa.com

our economists no longer expect hikes in 2026 as lower energy prices and a less Sphia Salim

persistent shock points to softer inflation and marginally better growth. We revise our Rates Strategist MLI (UK)

front-end path lower and expect 10y Sonia at 4.5% by end-26. sphia.salim@bofa.com

See Team Page for List of Analysts

Forecasts vs forwards: Fed hikes underpriced

BofA forecasts 75bp of Fed hikes by YE ’26 versus market pricing of 35bp. Across other For a list of open trades as well as

regions, BofA forecasts 25bp of ECB hikes, no more BoE hikes, no RBA hikes, 25bp from those closed over the past 12

the BoJ, and no BoC hikes by YE ’26. months, see our Rates Alpha trade