Asia rates: Reducing risk into the FOMC

Research evidence excerpt

Asia rates: Reducing risk into the FOMC

Global Markets Research

28 July 2026Asia Insights

Rates - Asia ex-Japan

Research Analysts

Asia rates: Reducing risk into the FOMC Asia Rates Strategy

Albert Leung - NIHK

Unwind receive Korea (versus partial pay Taiwan). albert.leung1@nomura.com

+852 2252 1401

Our medium-term view continues to anticipate higher Asia rates for two reasons: 1) the Clair Gao, CFA - NIHK

market debate over the Fed’s next move has clearly shifted to whether the Fed will hike or clair.gao@nomura.com

hold, from whether it will hold or cut earlier in the year. Therefore, we would expect some +852 2252 1081

Fed hike term premium to remain priced, even if the Fed leaves policy rates unchanged

this week, and 2) some geopolitical risk premium should remain priced in energy prices,

despite the interim Iran deal. We have discussed these views in prior reports and these

themes remain intact (See AsiaInsights-Asiarates:Somecautionstillwarranted, 14 July

2026 and AsiaInsights-Asiarates:Somestabilitylikelyafterrecentrally, 30 June 2026).

But some trading around our more bearish medium-term view

Still, a bearish medium-term view does not mean we do not see opportunities for shorter-

term trades it at times.The risk/reward was asymmetrically skewed towards paying India

rates around end of June, for instance, when oil was ~$70/barrel and 5y NDOIS was

sitting close to (but not yet broken below) the 200-day moving average. We tookprofiton

thepay5yNDOISposition last Monday, but if oil returns to the $70-75 level again, we

could consider reinitiating a pay position.

We reduce the conviction level on our receive Sep-5y Korea versus Taiwan trade to 2/5

We have been recommending a receiveSep-5yKoreaversusTaiwanNDIRSposition

(1:1 DV01 ratio) since 24 June.