US Fixed Income Overview

Research evidence excerpt

US Fixed Income Overview

J P M O R G A N Global Markets Strategy

31 July 2026

Warshach test

• Econ: We are pulling forward our next rate hike from 2H27 to December this Fixed Income Strategy

AC year, with policy rates on hold at 3.75-4.0% thereafter. September is a risk if Jay Barry

inflation heats up again soon. We look for the unemployment rate to modestly (1-212) 834-4951

rise to 4.3% and for 75k in payroll growth in July john.f.barry@jpmorgan.com

• Treasuries: Given Warsh’s comments suggesting the balance sheet could be Molly(1-212) Herckis622-0899

more in play alongside a reduced commitment to the 2% inflation target, the molly.herckis@jpmchase.com

risk points to further bearish steepening; initiate 2s/10s steepeners. We raise J.P. Morgan Securities LLC

our YE26 10-year forecast from 4.70% to 4.85%, and we raise our 30-year

target from 5.20% to 5.40%, driven by our renewed bullish stance on inflation

breakevens, and an expectation that term premium will rise somewhat. Initiate

5Yx5Y zero-coupon inflation swap wideners, as Warsh’s comments on

inflation expectations and broader inflation metrics increase the likelihood of

a repricing in forward inflation rates

• Interest Rate Derivatives: We don't expect the refunding next week to have

a major impact on swap spreads. Both the USZ6 and WNZ6 bases are likely to

widen in a sell-off, acting like a put option; for investors who would like to gain

asymmetric exposure to yields increasing further and the curve steepening, we

recommend buying the WNZ6 or USZ6 factor-weighted bases

• Short Duration: We expect funding conditions to be firmer on average

through August and we continue to favor being short August SOFR/FF basis

(SERFFQ6)

• Securitized Products: A steeper curve, the Fed likely on hold until later in the