Asia rates: Some caution still warranted: ... but avoid too much momentum chasing.

Research evidence excerpt

Asia rates: Some caution still warranted: ... but avoid too much momentum chasing.

Global Markets Research

14 July 2026Asia Insights

Rates - Asia ex-Japan

Research Analysts

Asia rates: Some caution still warranted Asia Rates Strategy

Albert Leung - NIHK

… but avoid too much momentum chasing. albert.leung1@nomura.com

+852 2252 1401

On 30 June we said Asiaratesarelikelytostabilizeaftertherallyfollowingtheinterim Clair Gao, CFA - NIHK

Irandeal and slightly lean towards the pay side. The two reasons behind this view clair.gao@nomura.com

include: 1) a more hawkish June FOMC and 2) oil prices will likely retain some geopolitical +852 2252 1081

term premium despite the interim US-Iran deal.

Fast forward two weeks and we think the stance is still valid. On US rates, the key focus is

on tonight’s June CPI data release. But with the market clearly already pricing hikes

(~52bp until March 2027) and Fed officials having not pushed back much against this

pricing, we think the asymmetry still lies more towards a strong print and higher rates. On

an oil price move, we are still of the view that some premium needs to be priced in. But we

will avoid too much extrapolation, as there is also the risk of the market moving to price in

a more meaningful re-escalation and then Trump moving to de-escalate.

Overall, our approach remains to receive in markets where rates are significantly above

their levels before the Iran war started (like Korea) and pay those that have risen relatively

less in the past few months (Taiwan and India to some extent) (Figure 1).

Still expect some Korea outperformance – Receive Sep-5y KRW vs TWD

We currently have receive Sep-5y Korea vs Taiwan with a conviction level of 4/5. Over

the past couple of weeks the spread has stopped widening, but it has also not