📡 Macro ETF Radar 中文

Rates Weekly 2026-07-27

Interest Rate Weekly · 2026-07-21 to 2026-07-27

One-line summary: Last week the main global rate theme was 'inflation and fiscal supply concerns once again outweigh easing expectations'; the US front and long ends rose together, Canada followed but much more mildly, and the Euro area was characterized by 'holding steady but still constrained by inflation.'

I. Review of Last Week

1) United States: From 'July FOMC expectations' to 'rate-hike speculation', short end led gains while long end was restrained by fiscal and inflation worries

Last week the US rates market narrative was tightly concentrated. News flows moved from the pre-July FOMC expectations (7/25) gradually toward the market shifting to bet on a July rate hike (7/24), and by the weekend there was more direct discussion—'Will the Fed hike?' (7/26). In parallel, multiple pieces focused on long-term Treasuries: long-term Treasury yields jumped, the bond market is more nervous about inflation and large new issuance (7/25); long bonds are making the market uneasy (7/23); rising bond yields are beginning to transmit to other key rates (7/23); US mortgage rates rose to a one-year high of 6.77%, likewise attributed to bond market concerns about inflation and debt growth (7/22).

These headlines and the curve data mutually reinforced each other, and strongly so:

You can see the whole US curve moved up, but the most pronounced increases were at the front end, especially the 2Y and 5Y. This aligns closely with the market re-pricing toward a potentially more hawkish July meeting. The two-month Treasury yield jumping 13bp in a single day, while not in this snapshot, is directionally consistent with the strong uplift at the 2Y: the market last week was not trading 'quicker cuts' but rather 'a longer period of high rates' or even 'another hike.'

In curve shape terms, US 2s10s is +34bp. Looking at the snapshot itself, the US is not currently in an extreme inverted front-end recession-pricing state, but rather a positively sloped curve with overall elevated rate levels. Coupled with the 2Y having risen 59bp over 60d and the 10Y up 36bp, last week continued a situation of bear-steepening followed by further front-end catch-up: the long end is worried by inflation and fiscal supply, while the short end is beginning to more seriously price a policy path that 'doesn't cut as soon.'

Credit, described only qualitatively: US HY OAS 20d -4bp, IG OAS 20d +3bp. This indicates last week’s rate rise was not driven by a broad deterioration in credit spreads, but more like an upward revision of the risk-free rate itself. Given the credit series has only 3.1 years of history, we do not extrapolate statistically.

2) Canada: Inflation cooling did not bring significant rate relief; yields were lifted passively but much less than in the US

Canada's clearest macro news last week was 'Canadian inflation cooled, but the relief felt by renters and homeowners is uneven' (7/20). Intuitively that should have put some downward pressure on the domestic front end, but market behavior was: the entire Canadian yield curve also rose, just by much less than the US.

Data as follows:

Canada and the US formed a stark contrast:

1. Short end moved up in line with global rates: Over the past 5d the entire Canadian curve rose 2–4bp, showing it did not independently trade 'inflation cooling → yield decline.' 2. Mid-term moves much weaker: US 2Y 60d has risen 59bp, while CA 2Y 60d is -13bp; US 10Y 60d +36bp, while CA 10Y is 0bp. This means Canada was carried along by global long-end and US pressure, but local re-pricing was far less intense. 3. Curve is steeper: CA 2s10s is +70bp, significantly higher than the US +34bp. In other words, Canada’s curve looks more like 'front-end relatively contained, long end carrying term premium' rather than an extreme expression of ongoing policy-rate hikes.

Judging from the news-curve correspondence, Canada’s inflation cool-off did not directly reverse yields, but at least it limited the upward re-pricing of Canada’s front end. This is one of the key relative developments within North America this week: the US turned more hawkish; Canada remained more moderate.

3) Global: ECB held steady, Japanese long-end volatility rose, and global duration pricing remains constrained by 'high inflation/high supply'

Global cues mainly came from Europe and Japan.

Europe: headlines included:

Taken together, the information does not say 'the euro area has decisively moved back to easing', but rather: policy rates are temporarily being held steady while inflation constraints remain, and the central bank is improving operational frameworks and market liquidity arrangements. The phrase 'despite persistent inflationary pressure' in the headlines is especially important; it does not conflict with the US narrative of renewed inflation vigilance, but the ECB’s choice is to stand pat for now.

Japan: two Reuters headlines focused on the same issue: Japanese government bond yield spikes rekindle 'widow-maker' trade concerns, but fiscal outlook keeps many investors cautious (7/23). This shows that global long ends under pressure are not limited to the US; fiscal sustainability and long-term inflation risk are more general suppressive factors.

Therefore, last week the core of the global rates market was not a single central-bank policy inflection, but rather multiple economies simultaneously facing: front ends driven by policy path expectations and long ends driven by fiscal supply and inflation persistence concerns. The US was the strongest, Canada was milder, the euro area stood pat but without an easing signal, and Japan showed rising long-end volatility risk.

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II. Views on Future Rates

1) Method boundary: give directional views only for 'proven' segments; other segments are unpredictable

This report’s views for roughly the next 3 weeks are strictly bounded by signals that have been validated in your data.

This is important: carry is the expected return when yields do not move; it’s a tailwind, not a directional prediction; if yields rise, price losses can fully offset carry.

2) US short end: over the next 3 weeks, 2Y/5Y can still be judged as 'biased up'

In the predictable portion, the US short and mid-short end remain unfavorable to bond prices.

Although the edge is not overwhelming, given a large sample it is enough to support a bias toward yields continuing to rise. Coupled with the recent market context—a re-pricing toward a more hawkish July FOMC, the 2Y up 21bp over 5d and 60d z-value 2.68—this indicates the US short end has not yet shaken off the momentum of 'revising overly optimistic easing expectations.'

This means for the next ~3 weeks, the main tone for the US front end should be understood as: there is trading risk of further upside to policy-rate expectations; it is not an environment suited to casually betting on a rapid front-end decline.

However, note that 2Y and 5Y have already risen substantially over the past 60d and their z-values are high, which shows the market has done significant re-pricing. 'Biased up' does not mean a linear large rise, nor that yields will rise every day; it simply means that statistically, upward moves are slightly more likely than downward moves.

3) US long end: direction is unpredictable, only carry can be discussed; but the long end is most sensitive to inflation and supply

For US 10Y and US 30Y, be clear: direction is unpredictable; no directional judgment.

Therefore, over the next 3 weeks one cannot say the 10Y or 30Y will certainly rise or fall. What can be said:

1. Static carry is not bad

2. But carry is not a buy signal The US long end is exactly facing the two recurring pressures seen in the news: inflation worries and large debt/supply concerns. In this environment, if long yields continue to rise, duration price losses can quickly overwhelm the carry earned over a few weeks. Especially at the 30Y, nominal carry is higher but volatility is also larger, and its carry-related reliability is only 0.077, so its marginal significance is limited and should not be overemphasized.

3. Curve implications The US currently has 2s10s +34bp, and combined with last week’s 'front end led, long end also up' reality, the curve is not a simple recession-cut pricing structure. For mid-term positioning, this looks more like an environment where the front end has a directional signal while the long end trading depends more on risk appetite and event shocks.

Thus the most honest statement on the US long end is: there is carry tailwind but direction is unpredictable; if inflation and supply concerns persist, price risk can more than offset carry.

4) Canada: direction unpredictable, but relatively milder than the US and the curve is steeper

The entire Canadian curve belongs to the ≈ random-walk category, so direction is unpredictable; no judgment. This includes:

But two static characteristics are visible:

1. Carry is decent

2. Relative to the US, Canada is still milder Canada’s moves last week were much smaller than the US, and its 60d performance is also clearly weaker, indicating local macro constraints have not shifted as hawkishly as in the US. Combined with CA 2s10s +70bp, Canada’s curve is steeper, reflecting lower front-end pressure.

So, in cross-country relative terms, one can say US short-end pressure is greater than Canada’s short end, which is the natural result of the news flow 'US re-trading hike risk; Canada sees inflation cooling.' But emphasize this is relative strength, not an absolute directional prediction for Canada.

5) Curve monitoring priorities for the next 3 weeks

For a mid-term ~3-week position, the three things worth watching next are:

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III. Risk Warnings

1. Event risk is higher than usual Markets were already highly sensitized around the July FOMC last week; any change in meeting-related messaging could amplify front-end volatility.

2. Long-end supply and inflation narratives can surprise to the upside News on US long bonds and mortgage rates suggests sensitivity to 'high inflation + high debt' is rising. Even without new policy moves, long ends can move substantially due to changes in term premium.

3. Carry does not substitute for direction Many instruments currently have non-trivial carry, but that only represents expected return if yields do not move; if yields rise, especially for long-duration assets, price losses can quickly overwhelm carry.

4. Uncertainty is higher for Canada and the euro area Due to a lack of proven directional signals, the entire Canadian curve and the US long end should not be treated as having deterministic directions; while the ECB is holding steady, 'persistent inflationary pressure' means the subsequent path is still uncertain.

This report is for research purposes and not investment advice.

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