Global Rates Weekly: No strait line

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Global Rates Weekly: No strait line

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Global Rates Weekly

No strait line

The View: No strait line 10 July 2026

Geopolitical negotiations are not a “strait” line. US CPI & Warsh are risk for July hike. Rates Research

Hold EU Z6-Z7 flattener, pay US 2Y, US 2s10s flattener, short US vs CA & AU front end. Global

─ M. Cabana Table of Contents

Core views, trades and forecasts 2Rates: Family tradition

US: CPI likely needs to imply 0.35%+ core PCE for market to price July hike as a realistic The View 3

outcome. Stay short front-end rates & in flatteners; hawkish Fed risks underpriced. Rates – US 4

Rates – EU 6

EU: We discuss the performance of the 2y-10y and 10y-30y curves in the rates sell-off

Rates – UK 8

this week. Price action supports our view of better supply/demand outlook in back-end.

Rates – AU 10

UK: The US-Iran ceasefire breakdown makes our call for unchanged rates this year a Rates – JP 12

closer one, but we maintain our 2s10s steeper and long 7y Gilts on ASW trades. Front end – US 14

Inflation 16

AU: Markets are underpricing risk of Aug RBA hike. We close our received AONIA/SOFR

Special Topic – Monthly model update 18

trades and see scope for wider 6s3s ahead of seasonal pickup in Kangaroo supply.

Technicals 19

JP: GPIF's domestic bond holdings suggest focus of its JGB portfolio is shifting to 5y Rates Alpha trade recommendations 20

sector; GPIF likely to continue reallocating domestic & foreign equity holdings to JGBs. Global rates forecasts 24

Appendix: Common acronyms 25

─ M. Cabana, M. Swiber, B. Braizinha, R. Axel, K. Craig, E. Xiao, S. Salim, N. Thomas,

E. Davidsson A. Stengeryte, M. Capleton, O. Levingston, I. Hartstein, T. Yamashita Research Analysts 30

& S. Yamada