Rates Weekly: Unexpected steepening on long-end

EUR rates:Recap of the week:  This week saw a notable steepening of EUR rates, driven by structural flows and global rates volatility, while the front end experienced a modest rally due to US spillover effects. Investor focus turned to the Netherlands, where the second-largest pension fund's transition plan is expected to impact long EUR yields. European supply pressures were evident, contributing to the steepening trend, while Italy's BTPs demonstrated resilience amid steady demand.Tactical view:  The current market outlook is characterized by a neutral duration stance amidst supply concerns and a risk-off environment, with safe haven bonds offering support as risk appetite wanes. Additionally, structural forces in the EUR 10s30s and momentum indicates further steepening before stabilization around current levels. France challenged again by political hurdles, making the adoption of formal 2026 budget unlikely.Insights of the week:  What could be the drivers for the Bund yield next year? Back to pre-QE period to get an idea.US rates:This week’s release of the September NFP report is on balance more supportive of the doves given the rise in the unemployment rate, but it is not definitive enough to solidify a December cut (which we still lean to).  Directionally US rates may be somewhat range-bound all the way into the meeting, so we look at positive carry trades in the meantime, adding two: 3s30s swap spread flatteners and a 1s2s conditional bull steepener.