FX and Rates Sentiment Survey: A hike too far

Research evidence excerpt

FX and Rates Sentiment Survey: A hike too far

Accessible version

FX and Rates Sentiment Survey

A hike too far

Key takeaways 10 July 2026

Rates and FX• Investors doubt the Fed delivers all priced hikes, but hold elevated UST underweights

Global

• Yen bearishness is the most extreme since 2022, driven by policy concerns despite

intervention risks

• EM investors are turning neutral, with weaker conviction and increasingly globalized

macro views

Fed hike skeptics, but still underweight duration Ralf Preusser, CFA

Global benchmark investors have become increasingly skeptical that the Fed will deliver Rates Strategist

MLI (UK)

as many hikes as currently priced by the market. Among major central banks, ralf.preusser@bofa.com

respondents see the Fed and BoE as the least likely to meet market-implied tightening Adarsh Sinha

expectations this year (Exhibit 1). Even so, roughly 50% of respondents view current FX and Rates Strategist MLI (UK)

monetary policy as either modestly or very accommodative (Exhibit 12). adarsh.sinha@bofa.com

Meghan Swiber, CFA

At the same time, underweight US duration remains a widely held position (Exhibit 29). Rates Strategist

That may reflect stronger conviction in cross-market valuations or greater investor BofAS meghan.swiber@bofa.com

preference for steepeners rather than outright duration exposure (Exhibit 20).

Michalis Rousakis

FX Strategist

Exhibit 1: Which central bank is most likely to deliver LESS hikes (MORE CUTS) in 2026 than are MLI (UK)

currently priced? michalis.rousakis@bofa.com

Fed and BoE now considered as least likely to deliver as many hikes as priced Edvard Davidsson

Rates Strategist

30% edvard.davidsson@bofa.com Fed 4% 17%

14% Raghav Adlakha

27% EM Quant/Sovereign Strategist

BOE 23% MLI (UK) 22% raghav.adlakha@bofa.com 43%