Global Rates – And now my fears, they come to me in threes

Recent payroll data indicates labor market stabilization, justifying the Federal Reserve’s current hold on interest rates despite ongoing geopolitical tensions and oil price volatility. While the Treasury’s latest refunding remained uneventful, underlying discussions suggest a potential shift in future duration supply guidance, with expectations for increased coupon issuance by early 2027. In currency markets, the focus remains on carry trades, with the Australian and Norwegian currencies emerging as compelling bullish stories due to their high-yield status and energy-exporting profiles. Conversely, the Euro serves as a primary funding currency, reflecting its status as a growth and equity laggard. Global rates strategies anticipate 10-year U.S. Treasury yields testing the 4.5% range, while European yields may face downward pressure as the Eurozone contends with weak productivity and limited fiscal tailwinds.