Rates Weekly: Still some move in rates, despite year-end looming

EUR rates - Recap of the week:  Underperformance this week as macro signals reduce short-term risks of an undershoot on inflation targets and EGB responding to tightening real yields. Investment appetite French debt remains strong despite budgetary uncertainties. Meanwhile, going into 2026, the Fed faces credibility challenges regarding its rate-cutting strategy amidst persistent inflation and cautious approach on the $ money market.Tactical view:   Low volatility still characterizes year-end trading, but global bearish pressure has pushed the 10Y Bund out of its range and close to our year-end target near 2.80%. The move reflects contagion from US, UK and Japanese rates rather than domestic factors. Carry remains attractive on the BTP belly, while lingering political uncertainty in France argues for some OAT caution. We continue to expect further steepening at the long end of the swap curve, with the 2s10s also biased steeper as the front-end stays anchored and term premia rebuild. The swap-spread slope (10Y vs 30Y vs Euribor 6m) should maintain its gradual steepening trend.Insights of the week: EUR Swap spreads: Thoughts for 2026US rates:  Global long yields are rising, including US rates, influenced by Japan's hawkish Bank of Japan stance amid 3% inflation. While the UK enjoyed a momentary respite, developed bond markets face ongoing fiscal pressures and the risk of increased term premiums. We recommended tactical short positions on 10-year US Treasuries ahead of the Fed meeting, targeting a profit zone at 4.13%-4.15%. If yields do not reach this target by Tuesday, we will close the trade, but we remain optimistic about steepeners benefiting from potential selloffs.