Euro Cash: OW duration & caution on spread

Research evidence excerpt

Euro Cash: OW duration & caution on spread

Aditya Chordia AC (44-20) 7134-2132 Global Markets Strategy J P M O R G A Naditya.x.chordia@jpmorgan.com

J.P. Morgan Securities plc 17 July 2026

Matteo Mamprin (44-20) 7134-0329

matteo.mamprin@jpmorgan.com

J.P. Morgan Securities plc

Euro Cash

OW duration & caution on spread

• European yields sold-off and underperformed US yields over the past week as

focus remained on US-Iran conflict and increasing energy prices

• Keep tactical long 10Y Germany, with a tight stop and look to take-profit below

3.0%

• Maintain strategic OW Germany vs. US bias expressed via long 10Y Bund vs. UST

• German curve to continue to exhibit bear flattening/bull steepening dynamics

going forward

• Stay cautious on intra-EMU/€-SSA carry as ongoing US-Iran conflict challenges

the summer carry narrative

• Hold long 30Y EU vs. swap to express our strategic OW EU theme

• Keep short 10Y Italy vs. France as a carry-efficient broad risk-off proxy

• Recent Italian political developments highlight increasing friction within the coali-

tion government, thereby increasing the likelihood of political noise around the

2027 budget negotiations

• Stay UW 10Y Belgium vs. France/Germany in 50:50 fly as an attractive hedge

against a further Middle East escalation

• Supply: around €8bn of conventionals with auction next week in Germany and

Lithuania

German yields broadly sold off since last Friday in a bear-flattening move, while US yields

outperformed across the curve (Figure 1GermanyieldsbroadlysoldofsincelastFridayinabear-flateningmove,whileUSyieldsoutperformedacrosthecurve). Middle East tensions remain in focus, with ener-

gy prices, particularly natural gas, continuing to move higher as disruption around the Strait

of Hormuz persists.