Global Rates Weekly: VAR: inflation offside

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Global Rates Weekly: VAR: inflation offside

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Global Rates Weekly

VAR: inflation offside

The View: More to markets than oil 17 July 2026

Beyond energy prices, next week’s focus will be on ECB, UK, AU and CA data. We stick Rates Research

with UK steepeners, AU and CA longs vs US and money market flatteners in EUR. Global

─ R. Preusser Table of Contents

Core views, trades and forecasts 2Rates: Hikes bent, not broken

US: Soft inflation reduces odds of near-term Fed hike, we still hold pay 2Y view. Fed The View 3

balance sheet task force unlikely market moving; Aug refunding now in focus. Rates – US 4

Rates – EU 6

EU: ECB to stay on hold in July, Bund spreads trading cheap vs others globally, but

Rates – UK 8

seasonality points to more cheapening. We also look at potential GPIF flows in EGBs.

Rates – AU 10

UK: Mild response to conflict flareup, relative to April experience, tells us market has Rates – JP 12

altered its view of BoE reaction function. Supply metrics look tricky. Front end – US 14

Inflation – EU 16

AU: With just 5bps of hikes priced for Aug, risks are skewed to the upside for front-end

Technicals 18

rates ahead of AU jobs next week. We also recommend paying 2y 6s3s.

Rates Alpha trade recommendations 19

JP: We examine implications of a potential shift in Japanese public pension fund Global rates forecasts 23

allocation. An increase in domestic bonds' allocation supports JGBs, esp. 10-20y sector. Appendix: Common acronyms 24

Research Analysts 29

─ M. Cabana, M. Swiber, B. Braizinha, R. Axel, K. Craig, E. Xiao, S. Salim, E.

Davidsson, N. Thomas, A. Stengeryte, M. Capleton, O. Levingston, I. Hartstein, T.

Yamashita & S. Yamada Global Rates Research

MLI (UK)

Front end: July funding watch Ralf Preusser, CFA

Rates Strategist