Rates Weekly: A tailwind for rates markets

EUR rates:Recap of the week:   European rates remained supported by a risk-averse backdrop, with the rally clearly led by the long end while the front end eased only modestly. Cross-asset derisking continued to drive term-premium compression, while euro sovereign supply was absorbed smoothly and spreads stayed stable to slightly tighter, with France outperforming. Front-end rates remain anchored by a patient ECB and are additionally supported by easing energy-inflation risks after OPEC supply headlines, reinforcing our long positioning on the 2y Schatz.Tactical view: The Bund is expected to trade in a narrow range near 2.80-2.90%, with external impulses remaining episodic and EGBs playing a key role in the new G10 sovereign investing paradigm; US Treasuries remain more uncertain, encouraging diversification of sovereign risk.  Near-term risk-off and US tech concerns pushed the Bund out of its range, but the move remains plausible as a safe haven, with a consolidation expected at current levels before a tactical short is reinitiated; the Japanese political shift reinforces monetary policy expectations.Insight of the week: Finding value in 2026 after the compressionUS rates:With the change to our Fed forecast to 25bps cuts in April, July, and October, we revise several of our longstanding views and recommendations, including closing out our core steepening views – for now.  We also unwind a few other trades and turn tactical in general as we expect another period of range trading ahead.