Global Fixed Income Markets Weekly: Still cautiously long European duration

Research evidence excerpt

Global Fixed Income Markets Weekly: Still cautiously long European duration

J P M O R G A N Global Markets Strategy

17 July 2026

Global Fixed Income Markets

Weekly

Still cautiously long European duration

Rates Strategy

Francis Diamond AC

(44-20) 7134-1504

francis.diamond@jpmorgan.com

J.P. Morgan Securities plc

• Overview: European yield curves bear flattened this week driven by another Aditya(44-20) 7134-2132Chordia

drift higher in energy prices, particularly natural gas, while US yields aditya.x.chordia@jpmorgan.com

outperformed with a 5bp bull steepening of the curve and JGBs rallied beyond J.P. Morgan Securities plc

the 5Y sector as markets focused on the strong 20Y auction and discussions Khagendra Gupta

around GPIF allocation changes. Next week, ECB is widely expected to stay (44-20) 7134-0486

on hold, likely reiterating the data-dependent guidance while retaining a khagendra.x.gupta@jpmorgan.com

tightening bias. With markets already pricing in a peak of more than 50bp, we J.P. Morgan Securities plc

think a hawkish surprise from the ECB is unlikely; we continue to see the next Ben K Jarman

ECB hike in September. (61-2) 9003-7982

ben.k.jarman@jpmorgan.com

• Euro: Stay long 10Y Germany, with a tight stop, and look to take-profit below J.P. Morgan Securities Australia Limited

3.0%. Stay cautious on intra-EMU/€-SSA carry as the ongoing US-Iran Takafumi Yamawaki

conflict challenges the summer carry narrative. Hold long 30Y EU vs. swap. (81-3) 6736-1748

Recent Italian coalition friction raises political-noise risk into the 2027 budget: takafumi.yamawaki@jpmorgan.com

stay short 10Y Italy vs. France. Hold UW 10Y Belgium vs. France/Germany. JPMorgan Securities Japan Co., Ltd.

Keep a bullish duration bias on the money market sector via options. Stay in