Global Rates Weekly

Latest edition · October 2, 2026

BofA Global Rates Weekly Start of rates bite 2026 10 02

BofA Global Research assesses that surging global bond yields are finally beginning to restrict financial conditions, evidenced by widening OAT-Bund spreads and US high yield softening. However, policy remains insufficiently restrictive, and the team recommends staying paid on the front end in the US and Australia while maintaining curve flatteners.

In this Global Rates Weekly, BofA highlights that large global rate swings in September are starting to bite financial conditions across sovereign and credit spreads. In the US, the team maintains paid 2Y positions and resets the 2s30s flattener stop to 100bp ahead of key payrolls and inflation data, noting that standard Taylor rules suggest a 4.8% terminal Fed funds rate. In Europe, 10y OAT-Bund spreads widened past 140bp, but backstops should keep spreads below 150bp. In Japan, long-end yield spikes reflect global spillovers rather than domestic shocks, supporting 30y JGB asset swap longs. Across markets, rates volatility has transitioned to a structurally higher regime, and money market funds are shunning intermediate Treasury bills in favor of ultra-short paper and FRNs.

Key takeaways from the latest edition

• 1.Rates are beginning to bite broader financial conditions as seen in OAT-Bund spread widening and US high-yield softening, but policy is not yet sufficiently restrictive, warranting a paid bias on the front end and curve flatteners in the US.
• 2.The 10y OAT-Bund spread widened over 30bp in four days to ~140bp, approaching sovereign crisis levels; fair value is modeled at 100-110bp, with five major backstops likely to prevent sustained widening beyond 150bp.
• 3.Rates volatility has repriced materially higher, reflecting higher forwards and a normalization of the logVol regime; markets should adjust to a structurally higher vol regime into late 2026.

What this series covers

• Core views, trades and forecasts
• The View
• Rates – US
• Rates – EU
• Rates – AU
• Rates – JP
• Front end – US
• Front end – UK
• Special Topic – A higher vol regime
• Technicals
• Rates Alpha trade recommendations
• Global rates forecasts

Edition archive

• BofA Global Rates Weekly Start of rates bite 2026 10 02

  October 2, 2026

• Global Rates Weekly Running from rates

  September 25, 2026

• Global Rates Weekly From Jackson to action

  September 18, 2026

• Global Rates Weekly Bigger house needed

  September 11, 2026

• Global Rates Weekly Bonds falling, autumn calling

  September 4, 2026

• Yen’d game

  August 7, 2026