Ian Lyngen and Ben Jeffery bring you their thoughts on the U.S. Rates market for the upcoming week of July 6th, 2026, and respond to questions submitted by listeners and clients.

Julying Volatility

Macro Horizons

# Full Transcript

**Podcast:** Macro Horizons

## Transcript

This is Macro Horizons, episode 381, Julying Volatility, presented by BMO Capital Markets. I'm your host, Ian Lingen, here with Ben Jeffery to bring you our thoughts from the trading desk for the upcoming week of July 6th. As summer trading conditions take hold and the mercury rises, we're wary of the siren song of declining volatility in an environment of persistent uncertainty.

What could possibly go wrong? Again. Each week we offer an updated view on the U.S. rates market and a bad joke or two, but more importantly, this show is centered on responding directly to questions submitted by listeners and clients. We also end each show with our musings on the week ahead.

Please feel free to reach out on Bloomberg or email me at ian.lyngen at bmo.com with questions for future episodes. We value your input and hope to keep the show as interactive as possible. So that being said, let's get started. In the week just passed, the treasury market saw a return to trading the fundamentals with the backdrop of ongoing geopolitical uncertainty.

It was a holiday-shortened week and the price action was, to put it mildly, choppy. We have seen the ceasefire in the Middle East extend. And while there were some reports early in the week that hostilities were still ongoing, both sides have apparently agreed to continue to honor the ceasefire. Ship traffic through the Strait of Hormuz has continued to increase, albeit not back to the prior levels. Nonetheless, the energy sector has been remarkably well-behaved, all things considered, with the

front-month WTI contract trading near $70 a barrel. Not quite back to the pre-war zone, which was effectively $55 to $65 a barrel. But the conversations around the energy sector have shifted from whether or not the new floor will be $80 a barrel, to whether or not we should be worried about a medium-term supply

glut that will challenge the bottom of the prior range once traffic out of the Persian Gulf returns back to normal levels. It was also an interesting trading environment given the amount of volatility, albeit in-range volatility, that was seen throughout the week. Now, this is very consistent with the time of the year that the market is entering. Typically, as summer vacations increase, attendance decreases, and conviction remains muted.

These are precisely the type of trading dynamics that we expect will define the next several weeks in the U.S. rates market. After all, the summer doldrums are quickly approaching on the horizon, and the monetary policy outlook remains stable in the near term, but unclear as we get to the September meeting or beyond. The economic data continues to make the case for patience, and in light of the outright

level of U.S. yields at the moment, the equity market has continued to perform well overall, and it's worth highlighting that we'll soon be entering earnings season, which will provide yet another litmus test for current ...

Julying Volatility

Transcript

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Julying Volatility

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.