The Fixed Income Digest: Agg alpha: Jul ’26, room to reduce IG & duration risk

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The Fixed Income Digest: Agg alpha: Jul ’26, room to reduce IG & duration risk

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The Fixed Income Digest

Agg alpha: Jul ’26, room to reduce IG &

duration risk

Agg rebalance views: prefer IG spread vs duration 23 July 2026

We offer fixed income views ahead of the month-end portfolio rebalancing. Our views: United States

duration = short, curve = 2s10s flattener, mortgages = neutral, credit = neutral.

Rates Research

Relative to current positioning, investors should cover IG overweight and move Meghan Swiber, CFA

underweight duration. We remain neutral MBS on macro uncertainty. Active managers Rates Strategist

BofAS

appear to have room to embrace our short duration and more neutral spread views. meghan.swiber@bofa.com

Duration: short bias MarkRates StrategistCabana, CFA

Pay 2y rates with correction hiking cycle risk still underpriced. We reset our target to BofAS

4.40% with current Fed pricing reflecting an unlikely outcome. mark.cabana@bofa.com

See report: Global Rates Weekly. - M. Swiber, M. Cabana Securitized Products Strategy Chris Flanagan

Curve: 2s10s flatteners FI/MBS/CLOBofAS Strategist

Hold 2y10y flattener. Fed hikes push the front end higher while the long end stays christopher.flanagan@bofa.com

anchored. As policy moves toward—or above—neutral, the curve compresses, with Jeana Curro MBS Strategist

inversion a natural outcome of restrictive policy. – M. Swiber, M. Cabana BofAS

jeana.curro@bofa.com

Mortgages: remain neutral amidst uncertainty Ge Chu, CFA

We have maintained basis neutral stance since May 15. The basis has held impressively MBS Strategist

rangebound around 105-110bps since June while this week is holding at the top of that ge.chu@bofa.com

small range. We stay neutral given broader rate and macro uncertainty. Credit Strategy