Agnes Dengaraita

Window dressing

Ralf Preusser, Mark Cabana, Sphia Salim, Agne Stengeryte, Agnes Dengaraita

Strategists maintain a "bear flat" outlook for U.S. yields while projecting a December rate hike from the ECB and a near-certain 25 basis point increase from the Bank of England driven by persistent inflation. Market positioning anticipates divergent outcomes based on U.S. midterm elections and U.K. supply dynamics, with a Democratic sweep potentially driving bear steepening and the DMO's reduced long-dated issuance supporting bullish steepener trades in gilts. French sovereign risk remains tightly correlated to global equity sentiment, leaving OAT spreads vulnerable to fiscal developments absent significant intervention thresholds from the European Central Bank.