FX and Rates Sentiment Survey Yen erated fears

FX and Rates Sentiment Survey Yen-erated fears

14 August 2026 Key takeaways • Interventions have failed to turn JPY sentiment around. BoJ is seen as behind the Rates and FX Global curve, but a 2% terminal may do the trick • Sentiment on US rates & USD has softened following soft US data & the dovish Jul FOMC. Fed's credentials do not appear eroded • EM sentiment and positioning have returned to Feb '26 levels, supported by a low vol/bullish carry environment

Ralf Preusser, CFA JPY fears vs BOJ hopes Rates Strategist MLI (UK) The recent interventions have failed to turn JPY sentiment around. On the contrary, JPY bearishness increased considerably over the past month, reaching four-year highs Adarsh Sinha (Exhibit 1). FX and Rates Strategist MLI (UK) JPY bearishness primarily reflects survey respondents’ concerns that the BoJ remains Meghan Swiber, CFA behind the curve and is consistent with a further deterioration in sentiment toward Rates Strategist Japanese duration (Exhibit 22, Exhibit 44). While bearishness on both Japanese rates and BofAS the JPY is elevated relative to the start of our sample in Dec-2011, positioning appears Michalis Rousakis less extreme than sentiment would suggest (Exhibit 30, Exhibit 32). To us, this suggests FX Strategist MLI (UK) investors await greater clarity on the BoJ’s policy path, favouring carry in the meantime (Exhibit 4). Edvard Davidsson Rates Strategist What terminal rate could stabilize the JPY? Most respondents believe that 2% (i.e., four MLI (UK) additional hikes) could do the trick (Exhibit 21). Raghav Adlakha EM Quant/Sovereign Strategist Exhibit 1: FX exposure and view 2011-26ytd: JPY MLI (UK) JPY FX sentiment makes new lows, reaching levels not seen since 2022, while positioning also turned notably shorter Global Rates & Currencies Research MLI (UK) 40 See Team Page for List of Analysts 20 Our survey was conducted on 7–12 August 2026. A total of 32 Fund Managers 0 responded, with USD 467bn AUM. Responses came from the UK, Continental Europe, Asia -20 and the US.

-40 Invitation to join survey exposure - view JPY BB exposure JPY BB View If you are a benchmarked investor and would -60 like to participate in this survey, please click Dec-11 Feb-13 Apr-14 Jun-15 Aug-16 Oct-17 Dec-18 Feb-20 Apr-21 Jun-22 Aug-23 Oct-24 Dec-25 the sign-up link or contact the authors or Source: BofA Global Research FX and Rates Sentiment Survey. BB is the Bull-Bear Index for exposure and view. It weights responses to your BofA sales representative. create an index ranging from -100 to + 100, zero representing neutral. See appendix for formulas. Participants in the survey will receive the BofA GLOBAL RESEARCH full set of monthly results but only for the relevant month in which they participate.

Abbreviations AUM: assets under management BoE: Bank of England Trading ideas and investment strategies discussed herein may give rise to significant risk and are not suitable for all investors. Investors should have experience in relevant markets and the financial BoJ: Bank of Japan resources to absorb any losses arising from applying these ideas or strategies. ECB: European Central Bank BofA Securities does and seeks to do business with issuers covered in its research EM: emerging market reports. As a result, investors should be aware that the firm may have a conflict of FOMC: Federal Open Market Committee interest that could affect the objectivity of this report. Investors should consider this IEEPA: International Emergency Economic report as only a single factor in making their investment decision. Powers Act Refer to important disclosures on page 24 to 26. NFP: non-farm payrolls PBoC: People’s Bank of China RBA: Reserve Bank of Australia

US data softness vs Fed dovishness By contrast, sentiment toward the USD and US rates has shifted in response to softer US data and the dovish July FOMC meeting. Survey respondents have turned somewhat bearish on the USD and trimmed their underweights in US duration (Exhibit 2, Exhibit 33). Long rates are now the highest conviction trade for the rest of the year (Exhibit 6).

The Fed’s inflation-fighting credentials do not appear to be eroded. While most respondents still view the…