Global Macro Outlook and Strategy: Global Rates, Commodities, Currencies and Emerging Markets

Overall summary — US Rates: The repricing higher of Fed expectations explains nearly all of the rise in 10-year yields and the flattening of the Treasury curve over the past month; current pricing looks appropriate and does not appear to have overrun fundamentals. The potential for a more wholesale unwind of long positions could pose a bearish risk for Treasuries, while more material weakness in macro data or equity markets could provide a ceiling for rate moves. We stay neutral on outright duration for now, but hold 10s/20s/30s belly-cheapening butterflies for soft bearish exposure. International Rates: DM front-end yields eventually rallied 10-30bp and yield curves steepened ~10-20bp across most DM markets;