At Any Rate Global Rates 2026 Outlook
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Nov 26, 2025 In this insightful discussion, Phoebe White shares her expertise on U.S. inflation and forecasts a path for Treasury yields, while Ipek Ozil delves into U.S. swap spreads and introduces compelling option strategies for the coming year. Khagendra Gupta presents his take on the volatility of German swap spreads, and Aditya Chordia analyzes the outlook for German yields and intra-EMU spreads against a backdrop of evolving political risks. Together, they provide a comprehensive view of global rates as we head towards 2026.
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Shallow Fed Easing And Range-Bound Yields
- The U.S. will likely see two 25bp Fed cuts (Jan, Apr) and then an extended hold, producing a shallow easing cycle.
- That path supports range-bound near-term yields with 10-year U.S. Treasuries rebounding to ~4.25% mid-year and ~4.35% year-end.
Why Term Premium Has Moderated
- Term premium retraced from its 2023–2025 rise due to receding fiscal worries, stronger demand, and fading Fed-independence fears.
- JPMorgan expects term premium to remain contained into 2026 absent renewed fiscal or political shocks.
Play German Carry And Tactical Duration
- Position for range-bound German yields with tactical long-duration exposure, especially in the 5–10y segment.
- Favor Germany versus the U.S. in intermediate sectors given ECB policy stability and robust private demand.