Monthly Inflation Outlook: A long hot summer for front-end breakevens

Research evidence excerpt

Monthly Inflation Outlook: A long hot summer for front-end breakevens

J P M O R G A N Global Markets Strategy

16 July 2026

Monthly Inflation Outlook

A long hot summer for front-end breakevens

• Front-end inflation breakevens have rallied over the past few weeks as oil and, Rates Strategy

AC in particular, gas prices have risen with rising uncertainty over the evolution of Francis Diamond

the US-Iran conflict amid increased hostilities in the Strait of Hormuz. We (44-20) 7134-1504

expect 1Yx1Y/5Yx5Y HICP and UK RPI inflation curves to remain flat francis.diamond@jpmorgan.com

(inverted). J.P. Morgan Securities plc

Frida Infante

• In the Euro area, 1Yx1Y HICP looks rich on a relative basis, but we continue (33 1) 8703 2581

to see inflation risks skewed to the upside and don’t fade the recent rally. We frida.infante@jpmorgan.com

hold 2s/5s HICP flatteners. We continue to expect 5Yx5Y HICP to range trade J.P. Morgan Securities plc

between 2.10-2.20% Harry Downie

• We hold our medium-term 15Y+ OATei z-spread IOTA widening bias. (1-212)harry.j.downie@jpmorgan.com270-9500

• The 5Yx5Y FCPI-HICP spread has significantly narrowed; we expect J.P. Morgan Securities LLC

reversion back towards positive territory and enter 5Yx5Y FCPI-HICP Jay Barry

wideners. (1-212) 834-4951

john.f.barry@jpmorgan.com

• In the UK, 1Yx1Y RPI looks rich outright and on a relative basis, but we don’t J.P. Morgan Securities LLC

fade as valuations incorporate increased risk-premia around the US-Iran Liam L Wash

conflict and increased oil and gas price uncertainty. We stay neutral on 5Yx5Y (1-212) 834-5230

RPI despite the optical cheapness as 5Yx5Y RPI has decoupled from liam.wash@jpmchase.com

intermediate nominal yields recently. J.P. Morgan Securities LLC