Piper Sandler Institutional Research Hub

Piper Sandler’s recent research highlights a volatile period for fixed income markets, characterized by significant shifts in Treasury yields driven by fluctuating oil prices and upside surprises in inflation data. The institution emphasizes the importance of defensive positioning for depository institutions, specifically advocating for the use of costless floor collars to protect net interest margins (NIM) as market participants anticipate a cycle peak. In the debt capital markets, Piper Sandler observes robust activity, with year-to-date bond issuance increasing 35.5% over 2025 and investment-grade volume showing strong year-over-year gains. Analysts identify a particularly “crowded” higher-for-longer trade in SOFR futures, noting that extreme short positions by leveraged funds could trigger a significant rally if employment or ISM data misses expectations. Furthermore, the firm points to tactical opportunities in MBS, agencies, and corporate yields, while monitoring economic softening in wage growth and housing affordability. Overall, the research suggests a shift toward securing floor protection and pre-approving hedging strategies to navigate an environment of unanchored inflation expectations and geopolitical volatility.