JPMorgan_Econ_FI-Global_Rates_Strategy_The_bond_vigilantes_strike_back-112908536_31页_2mb

J.P. Morgan Global Rates Strategy Update Summary

• US Rates:
  *Fed easing expected through 3Q25; 10Y UST forecasted to fall to 4.45% in 3Q25, rebounding to 4.55% by YE25. Position long 2-year Treasuries due to 25bp Fed easing. 2s/10s curve steep but avoid fading term premia concerns.

• Euro Area:
  *Hold long 10Y Bunds as ECB terminal rates priced. Forecast 10Y Bund at 1.95% mid-2025, curve sideways in H2024. Bullish steepening on 10s/30s. Trade 2s/10s tactically; strategic OW Germany vs. US in 1H2025. Buy SOFR puts vs. Euribor for Fed cycle tail risk.

• UK Rates:
  *Modest front-end bullish bias; 10Y gilt at 4.20% H2025, cautious on duration. 2s/10s steep bias. Avoid fading fiscal term premia.

• Other Countries:
  *Sweden: Cheap front-end; buy Jun25 SEK FRA, steepen curves. Norway: Medium-term duration bullishness. Japan: JPY rates rising, curve modestly bear flattening. Australia/NZ: Short ACGB Apr-2026s, receive April RBA-RBNZ OIS spread.

• Global Trends:
  *Slightly lower yields, moderately steeper curves. Cross-market divergences driven by exceptionalism and uncertainty. Bear steepening limited; long-end valuations cheap vs. CB forecasts. Germany yields excessively cheap vs. framework, hold long 10Y Bund.

• Trade & Tariffs:
  *60% China tariff would raise ~$215bn, slow growth. SOFR at highest levels; TGA drawdown may delay funding pressures.

• Fed Policy:
  *Revised hawkish stance; Fed easing door not open, supporting front-end. Yield curve divergence from underlying drivers signals risks.

Key Recommendations:

• Stay long 2-year Treasuries.
• Buy SOFR puts vs. Euribor.
• Trade 2s/10s curves steepening.
• Position for duration in Euro and UK cautiously.