Rates Vol Viewpoint: Global Vol 2H26 – More idiosyncratic as geopolitical risks fade

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Rates Vol Viewpoint: Global Vol 2H26 – More idiosyncratic as geopolitical risks fade

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Rates Vol Viewpoint

Global Vol 2H26 – More idiosyncratic as

geopolitical risks fade

Vol in 2H26 – More idiosyncratic as geopolitical risks fade 25 June 2026

The dynamic of rates volatility over 1H was mainly driven by geopolitical risk, with the Rates Research

transmission mechanism flowing through the oil dynamic and the repricing of policy United States

expectations across major central banks. Bruno Braizinha, CFA

Rates Strategist

As geopolitics fade the dynamic of vol globally is likely to become more idiosyncratic, BofAS

increasing the scope for x-market trades. We see US vol supported by the reflation +1bruno.braizinha@bofa.com646 743 7012

theme + mid-terms, EU vol normalizing further as the oil shock fades, JP vol supported in Sphia Salim

a context where the market is likely to continue to price a BoJ behind the curve (i.e., Rates Strategist

underpricing the potential for a regime shift), and AU vol the underperformer as the RBA MLI+44 (UK)20 7996 2227

shifts to an on-hold stance. sphia.salim@bofa.com

Tomonobu Yamashita

US vol – Supported by mid-terms & reflation RatesBofASStrategistJapan

US vol grid supported by reflation theme + mid-terms into & over the 4Q. 1y10y vol +81 3 6225 7950

tomonobu.yamashita@bofa.com

c.75-85bp, left side likely supported vs right near term. Carry bias likely to keep term

Shusuke Yamada, CFA

structure steep near term but higher uncertainty in 4Q26 likely to drive flattening FX/Rates Strategist

pressure. BofAS Japan

+81 3 6225 8515

Favor: 6m1y payer ladders, 2s10s floor ladders, 15m1y vs 3m1y receiver calendars & shusuke.yamada@bofa.com

5s30s cap spreads OliverFX and LevingstonRates Strategist

Merrill Lynch (Hong Kong)