Global Rates Weekly A break in the heat

Global Rates Weekly A break in the heat

14 August 2026 The View: Happy disinflation camper Recent US inflation and labor data reduce the urgency for near-term Fed hikes, driving a Rates Research shift in US rate views. Globally, the key focus is upcoming data and events across CA, JP, Global UK, and EU. Market activity seasonally light but 2H Aug still has meaningful event risk. Table of Contents ─ M. Cabana Core views, trades and forecasts 2

Rates: Moving with the data The View 3 US: Softer labor and inflation data shift risks lower for rates, prompting us to turn long Rates – US 4 5Y USTs and favor 5s30s steepeners. Rates – EU 7 Rates – AU 9 EU: We go short 10y Bunds vs swaps. German spreads trade rich based on their Rates – JP 10 relationship to rates vol, periphery & repo rates. Rates – CA 12 AU: We remain long 10y after hawkish RBA pause. Late August RBA speech raises Front end – US 14 possibility of lower ES rates and therefore higher demand for cash. Inflation – EU 16 Supply – US 18 JP: Improving JGB supply-demand dynamics are likely to support long-duration through Technicals 19 the next Diet session this autumn. We continue to favor long 30-year JGBs on ASW. Rates Alpha trade recommendations 20 CA: CA econ data surprised stronger, while US surprised weaker, shifting our x-market Global rates forecasts 24 views. We still believe market overprices risk of hikes. We rec U6-M7 CORRA flattener. Appendix: Common acronyms 25 Research Analysts 30 ─ M. Cabana, M. Swiber, B. Braizinha, R. Axel, K. Craig, E. Xiao, E. Davidsson, S. Salim, N. Thomas, O. Levingston, I. Hartstein, T. Yamashita, & S. Yamada Global Rates Research Front end: Easy-[RM]Peasy funding MLI (UK) US: We have limited conviction to fade recent easy funding conditions. We see funding Ralf Preusser, CFA Rates Strategist to likely remain stable and believe conditions support our long Dec '26 SOFR/FF views. MLI (UK) ─ M. Cabana & K. Craig Mark Cabana, CFA Rates Strategist Inflation & Supply BofAS Inflation EU: Forward OATei real yields have pushed higher, tracking the US, despite a Sphia Salim fair wind from end-July index event. We stay constructive – index story is far from over. Rates Strategist MLI (UK) Supply US: Core bond duration supply is set to reach historic highs in 2026, contributing See Team Page for List of Analysts to this year's long-end selloff. '27 supply risks remain tied to AI issuance & UST choices.

Technicals: UK-US 10Y yield broke support, double top? The UK-US 10Y yield spread is tightening. It has fallen below its 50wk SMA and trend line support, MACD points lower and a double top pattern may be forming.

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Core views, trades and forecasts Exhibit 1: Global rates trade quilt Views / trades in bold when changed / entered this week US EU UK CA JP AU Short: pay Jan FOMC Long bias Duration Short front-end vs UK Long front-end vs EUR Bullish long-end bias long 10y ACGB Long 5y UST / Close pay 2y UST U6-M7 CORRA flattener 5s30s steepener Steeper 2y-10y in Gilts Curve 2s10s flattener in options Steepening bias Neutral Steepening bias vs US Close 2s10s flattener 15y-20y flattener Jun27 IMM 2y Euribor-€str CORRA cheaper vs deposit Bases Long Dec26 SOFR/FF Sonia cheaper vs. Bank TONA below IOER Pay 2y 6s3s widener rate Short 10y5y RPI vs US Real yield curve flattener Long 1y5y EURi/sell payers Inflation Receive UKTi 31s-38s Long 5y5y infl. swap Receive forward real rates forward yield vs. swaps Short 10y German bonds vs Long low cpn 2y & 7y Gilts Short front-end spreads…