US Fixed Income Overview: Cool print on a hot summer day

Research evidence excerpt

J P M O R G A N

Global Markets Strategy

07 August 2026

US Fixed Income Overview

Cool print on a hot summer day

Econ: The July jobs number surprised to the downside, as nonfarm payrolls

declined by 23k and the unemployment declined another tenth to 4.1%;

however, this occurred alongside a tick lower in the labor force participation

rate. We are forecasting a 0.11%m/m rise in headline CPI along with a 0.22%m/

m uptick in core CPI in July

Treasuries: We think yields can remain rangebound over the near term, as

1y1y OIS have been trading in a 3.90-4.20% range for the last 3 months. Over

the medium term, we believe risks skew toward pricing in more Fed tightening,

as the debate over whether the current stance of monetary policy is restrictive

has not been settled. We also see risks to longer-term yields, as Chair Warsh’s

comments on balance sheet and the Fed’s inflation target both leave risks to

higher inflation expectations and term premium; we think the near-term

environment favors positive carry: maintain 2s/10s steepeners

Interest Rate Derivatives: We recommend initiating swap spread curve

steepening exposure and positioning for a correction in term funding premium

via 10s/30s spread curve steepeners. We recommend waiting for better entry

levels before initiating longs in vol

Short Duration: We find 3m Tier 1 non-financial CP attractive, where

investors can pick up modestly more yield by extending slightly out the curve

Securitized Products: We remain neutral on mortgages, with a preference for

clipping carry up the stack. We maintain our preference for the wings, with the

view that higher coupons offer reasonable carry at these rate levels and

depressed borrower responsiveness to rates

Corporates: IG spreads tightened up until Thursday when they widened from

another jumbo hyperscaler bond deal from GOOGL. We push up our overall

2026 gross supply forecast from $1.92tn to $2.0tn

We provide a cross-asset duration-adjusted supply update across fixed

income products. Supply has been heavy, mostly driven by IG hyperscaler

issuance, and we expect more to come

Near-term catalysts: CPI (8/12), PPI (8/13), Retail Sales (8/14), Consumer

…