Investment Rating - The report maintains a neutral stance on the tactical USD 5y5y model despite the underperformance of energy markets, indicating a cautious approach to investment in this area [7][21]. Core Insights - The report highlights a significant underperformance of US breakevens relative to oil strength, attributed to weak CPI figures and labor market data, as well as skepticism regarding the persistence of oil price movements [3][11]. - The FOMC's dovish reaction function is expected to positively influence TIPS breakevens, with projections indicating a marginal increase in unemployment while allowing inflation to overshoot [3][7]. - The report suggests that breakevens often overshoot fundamental values during periods of oil volatility, presenting potential trading opportunities, particularly in fading large oil-driven moves [5][13][22]. Summary by Sections US Market - Breakeven rates are recommended to be long, particularly in the 5-year area, as they are perceived to be undervalued due to tariff passthrough underpricing [7][8]. - Real rates are also recommended to be long, especially in the 30-year segment, where support has returned above 2.5% [7]. Euro Area - Breakevens are viewed as slightly cheap to fair value but lack compelling support, particularly in the long end [7]. - The report suggests that steepeners across the curve may be a better expression than outright positions [7]. UK Market - The report recommends a short position on the 10-year RPI, while suggesting a long position on the long end of the curve [7][8]. - The UK inflation performance is noted as strong, but the report indicates that it may be overpriced [4].