Global Rates Weekly: From Jackson to action

This BofA Global Rates Weekly reviews and previews monetary policy and global rates markets across the Fed, ECB, BoE, BoJ, RBA and BoC. Chair Warsh delivered a hawkish hike and said policy is not restrictive; we recommend paying 2y USTs and 2s30s flatteners, with simple frameworks pointing to fed funds above 5%. We revised US rate forecasts higher, expecting both 2y and 10y yields at 5.0% by end-2026. A BoJ hike is fully priced and we keep a bearish front-end bias via payers. In the UK, the QT overhaul supported a post-MPC rally and we stay long Gilts on ASW and forward real yields. In Australia, hawkish RBA repricing intensified; we remain paid Sep RBA OIS and recommend a 2s10s flattener. We also assess the US midterms as a likely muted risk event for rates, and note Treasury buybacks may have richened UST 10s30s by 5-10bp.