Treasuries: Going to babble on

Research evidence excerpt

Treasuries: Going to babble on

Jay Barry AC (1-212) 834-4951 Amanda Berke (1-212) 834-5739 Global Markets Strategy J P M O R G A Njohn.f.barry@jpmorgan.com amanda.berke@jpmorgan.com

J.P. Morgan Securities LLC J.P. Morgan Securities LLC 31 July 2026

Harry Downie (1-212) 270-9500

harry.j.downie@jpmorgan.com

J.P. Morgan Securities LLC

Treasuries

Going to babble on

• The Treasury curve’s twist steepening reflects Fed credibility concerns following War-

sh’s press conference. We expect the Committee to act in response and now expect the

first hike in December 2026, versus 3Q27 previously

• The curve’s behavior was unusual, with the dovish 50bp surprise in September 2024

being the closest analog

• Combined, we see room for further steepening over the near term, driven by rising infla-

tion expectations and rising term premium: we raise our YE 10-year and 30-year targets

to 4.85% and 5.40%, respectively

• We also recommend 2s/10s steepeners: the front end will likely find more support over

the near term and the 10-year sector remains somewhat rich

• We expect no changes to nominal coupon auction sizes and next week’s refunding. The

current auction schedule leaves Treasury well financed through FY26, though funding

gaps emerge in FY27 and beyond…

• ...We think Treasury should remove “at least” from forward guidance next week. How-

ever, with political factors at play, it may wish to avoid clearly signaling that an expected

increase in duration supply is drawing nearer, which risks pushing the curve steeper...

• ...Given the November refunding’s proximity to the midterm elections, if the guidance

remains unchanged next week, Treasury may reserve any guidance change until 2027

Market views

The curve twisted 15bp steeper this week, as front-end yields declined 4bp, while long-end