Global Rates Strategy: Long 30y Italian real yields

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Global Rates Strategy: Long 30y Italian real yields

Global Research

25 June 2026ab

Global Rates Strategy Interest Rates

GlobalLong 30y Italian real yields

Reinout De Bock

Strategist

Going long 30y Italian real yields at 2.43%, target 2.30% and stop 2.50% reinout.de-bock@ubs.com

+44-20-7567 0152

We went long 30y Italian real yields yesterday. Higher real yields are keeping nominal

yields elevated above pre-conflict levels even as oil prices have normalised. The global Mustafa Oguz Caylan

Strategistturn around in rate expectations from easing policy rates to hiking in response to the

mustafa.caylan@ubs.com

energy price shock has been a key driver. Long-end real yields should benefit from oil +44-20-7901 5203

prices trending lower and recent messaging from President Lagarde shifting more dovish

(Figure 1TurnaroundinrateexpectationshavepushedupItalianrealyields). The UBS economics baseline is for a hike in September but we see risks that Phoebe White

markets will price out some of the 16 bps of tightening currently priced - receive Sep'26

phoebe.white@ubs.com

ECB. BTP-bund spreads continue to be helped up well from buoyant risk sentiment +1-212-713 2130

(Figure 2Suportiverisksentimentshouldkep30yBTP-Bundspreadstighter). Steady 30y US real yields should also be supportive for Italian real yields

(Figure 330yItalianandUSrealyields). Kevin Warsh's first Fed meeting as Chair has seen volatility mostly in front-end

rates. Movement in the long-end of the US curve was relatively limited. The hikes priced

in for the Fed are more of a few adjustment hikes rather than another tightening cycle.

US and Italian yields remain higher than where they were before the Fed and the ECB

started cutting back in 2024.