Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Global Macro Strategy Outlook** for 2026, particularly regarding interest rates and currency trends across G10 economies. Core Insights and Arguments 1. **Interest Rate Trends**: - Lower G10 rates and a weaker US dollar are expected to persist into the first half of 2026, with a reversal anticipated around the US midterm elections in November 2026 [1][4][6] - US Treasury yields are forecasted to end 2026 at **4.05%**, after reaching **3.75%** by June [3][6] - The yield curve is expected to steepen further, particularly in the euro area where the ECB is projected to cut rates to **1.50%** [3][6][18] 2. **Currency Outlook**: - The DXY is expected to decline by **5%** to **94** in the first half of 2026 before rebounding in the second half [6][41] - Risk currencies like AUD and SEK are anticipated to lead gains, while USD/JPY is projected to fall to **140** due to declining US rates [6][41][47] 3. **Inflation-Linked Bonds**: - TIPS breakevens in the US are expected to tighten into mid-2026, with a widening anticipated by the end of the year as economic conditions improve [8] 4. **Sovereign Supply Outlook**: - Net coupon bond supply across the G7 is expected to decrease by **14%** year-over-year, amounting to **$2.45 trillion** in 2026 [26][34] - The decrease in net issuance is anticipated across the US, euro area, Japan, and New Zealand [34] 5. **Regional Specifics**: - **United States**: The Fed is expected to cut rates to **3.125%** in 1Q26, with 10-year Treasury yields projected to reach **3.75%** in 1H26 [52][76] - **Euro Area**: The ECB's depo rate is expected to fall to **1.50%**, with 10-year Bund yields projected to decline to **2.30%** by 2Q26 [58] - **United Kingdom**: The Bank Rate is expected to reach **2.75%** in 2026, with 10-year gilt yields around **3.9%** [64] - **Japan**: JGB yields are expected to rise to **1.65%** for 10-year bonds by 4Q26 [71] Other Important Insights 1. **Market Dynamics**: - The interplay between US and global rates will shape both rates and FX performance in 2026, with a focus on duration and curve trades over credit beta [25][40] - The anticipated fiscal policy changes could significantly impact investor expectations regarding sovereign supply [39] 2. **Investment Strategies**: - Preferred trades include long 5-year Treasuries and yield curve steepeners via options [57] - In the euro area, long positions in EU vs Germany in the 5-year sector are recommended as a carry play [62] 3. **Risk Factors**: - A potential mild US recession could lead to a significant drop in the funds rate, impacting Treasury yields [16][80] - The risk of a global risk-off episode could widen spreads beyond current expectations [21] This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the anticipated trends in interest rates, currency movements, and investment strategies for 2026.

Group 1: Gold and Silver Market - Gold and silver prices experienced significant volatility, with gold dipping below $4,100 an ounce after a more than 5% drop on Tuesday, marking the sharpest pullback in over five years [1][2] - The recent decline in gold prices is attributed to profit-taking and a general market correction after a strong performance, with no clear catalyst identified for the drop [1][2] - Analysts noted that gold was "massively overbought," indicating a potential for further market corrections in other sectors as well [2] Group 2: Global Equity and Bond Markets - European stocks, represented by the STOXX 600 index, fell by 0.3% after nearing a record high, while major Asian markets also showed declines [2] - Despite the selloff in gold, other safe-haven assets like bonds remained stable, with European government debt yields largely unchanged [3][4] - The U.S. Treasury yields reached a one-year closing low, influencing global borrowing costs and prompting investors to buy UK 'gilts' following steady inflation data [4][5] Group 3: Geopolitical Factors - Geopolitical tensions are affecting market sentiment, with uncertainty surrounding planned summits between U.S. President Trump and leaders from Russia and China [3] - The ambiguity in international relations is contributing to market volatility, although it has not significantly impacted safe-haven assets like bonds [3] Group 4: Economic Stimulus in Japan - Japan's new Prime Minister Sanae Takaichi is preparing an economic stimulus package that is expected to exceed last year's 13.9 trillion yen ($92.19 billion) to assist households with inflation [6]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The G7 net DV01 is projected to be $94.3 million per basis point, which is higher than the average of $72.3 million per basis point, indicating increased market activity [2][12] - In the euro area, net issuance is expected to be €14.6 billion over the next five weeks, with a total supply of €97.7 billion against €18.2 billion in coupons and €64.9 billion in redemptions [3][41] - The US is anticipated to issue $342 billion in the next five weeks, resulting in a net issuance of $94.3 billion after accounting for $29.1 billion in coupons and $218.6 billion in redemptions [5][44] Summary by Sections Government Bond Auctions - The upcoming week will see significant bond issuances across various countries, including $69 billion in 2-year UST, $70 billion in 5-year UST, and $44 billion in 7-year UST in the US [4][5] - In the UK, issuances include £1.7 billion in UKTi 1.125% Gilt 2035 and £3.25 billion in UKT 4.375% Gilt 2040 [4] - Japan will issue ¥2.6 trillion in 2-year JGB and ¥1 trillion in 20-year JGB [6] Supply Overview - The report outlines a detailed schedule of bond supply for the upcoming weeks, indicating a robust issuance plan across G7 countries [11][42] - The total cash flow for the euro area is projected to be negative, with significant redemptions expected to exceed new issuances [41] G7 Gross and Net Issuance - The G7 gross issuance figures show fluctuations, with the US leading in issuance amounts, followed by Japan and Canada [12][18] - The net issuance data indicates varying trends across countries, with the US showing a positive net issuance while the euro area reflects negative net issuance [18][20]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The G7 net DV01 is projected to be $109.3 million per basis point, significantly higher than the average of $72 million per basis point, indicating a robust supply environment [2][12][20] - In the US, a total of $468 billion in supply is expected over the next five weeks, with net issuance projected at $266.9 billion after accounting for coupons and redemptions [5][46] - The euro area anticipates approximately €117.7 billion in supply over the next five weeks, resulting in a net issuance of €39.4 billion [3][42] Summary by Sections Government Bond Auctions - The US will issue a new 3-year UST for an estimated $58 billion, a 10-year UST for $39 billion, and a 30-year UST for $22 billion [5] - In the UK, issuance includes UKT 4.5% Gilt 2035 for £4.25 billion and a syndicated launch of UKTi 1.75% Gilt 2038 for £4 billion [4] - Japan plans two auctions for enhanced liquidity totaling ¥1.1 trillion [6] Supply Overview - The report outlines a detailed schedule of bond supply across various countries, including specific amounts and types of bonds to be issued [11] - The total expected issuance in the euro area is €117.7 billion, with €15.8 billion in coupons and €62.4 billion in redemptions [3][42] G7 Gross Notional and DV01 Estimates - The G7 gross issuance shows significant fluctuations, with the US leading in issuance amounts, particularly in the weeks of May and June [12][13] - The DV01 for the G7 indicates a total of $120.4 million per basis point for the week of June 9, reflecting a strong issuance environment [13][20] Net Issuance and Cash Flow - The report highlights net issuance trends, with the US showing a positive net DV01 of $82 million per basis point for the week of June 9 [20][27] - The UK and Japan exhibit varying net issuance figures, with the UK showing a negative net DV01 in some weeks, indicating potential challenges in the market [18][31]