Global Fixed Income Report - June 12, 2026

US Treasuries

U.S. rates delivered a bull flattener, with Treasury yields lower across most of the curve and the 10Y declining slightly more than the 2Y. The immediate positioning implication is to reduce underweights in intermediate duration, but avoid aggressive long-end extension because inflation data remained above the Fed’s target. The 2Y yield fell 6 bps, the 5Y fell 8 bps, the 10Y fell 8 bps, and the 30Y fell 6 bps between 8 June and 12 June.

U.S. Bureau of Labor Statistics reported that the Consumer Price Index rose 0.5% in May 2026, with all-items CPI up 4.2% over the prior 12 months, while core CPI rose 0.2% in May and 2.9% over the year. The implication for rates is two-sided. The weekly rally in Treasuries suggests investors were willing to add duration after prior yield repricing, but the CPI print does not provide a clean green light for a dovish policy pivot. The forward-looking portfolio conclusion is that disinflation confidence remains incomplete: duration can be owned tactically, but the Fed reaction function remains constrained by headline inflation above target.

The ICE BofA Single-A US Corporate Index Effective Yield spread over the average US Treasury yield tightened from 97 basis points to 91 basis points. Safe assets performed, but riskier high-quality spread product also benefited from demand.

Outlook & Positioning: Maintain a moderate duration stance, centered on the 5Y–10Y sector. Investors should add selectively on yield backups rather than chase the rally. In credit, favor short-to-intermediate high-quality corporates, where spread carry remains investable but less vulnerable to late-cycle downgrade risk. Avoid overextending into long-duration credit unless inflation data show broader confirmation of disinflation.