Please join Ralf Preusser in conversation with Mark Cabana and Adarsh Sinha to discuss the outlook for G10 rates and FX. We will discuss implications of the new Fed call, updated rates and FX forecasts and the main themes we see drive markets away from the Fed.<br><br>You may also enjoy listening to the Merrill Perspectives podcast, featuring conversations on the big stories, news and trends affecting your everyday financial life.<br><br>&quot;Bank of America&quot; and “BofA Securities” are the marketing names for the global banking businesses and global markets businesses (which includes BofA Global Research) of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Securities, trading, research, strategic advisory, and other investment banking and markets activities are performed globally by affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc. a registered broker-dealer and Member of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. ©2026 Bank of America Corporation. All rights reserved.

Mid-year review

Global Research Unlocked

# Full Transcript

**Podcast:** Global Research Unlocked

## Transcript

Hello and welcome to Global Research Unlocked, the Interest Rate and FX series. This podcast is based on our weekly client conference call where our strategists, along with guests from other parts of BofA Global Research, discuss the most topical and pressing questions faced by our market. I'm Ralf Preusser, Head of Global G10 Rates and FX Strategy. Today's Friday, 26th of June. I'm joined today by Mark Cabana, Co-Head of Rates Research and Adar

Sinai, Head of G10 FX Strategy, for our mid-year discussion. For those of you who missed it, our mid-year reports came out earlier this week. If you haven't found them, please ping one of us and we will get them across to you. But let's look back at the last six months. Obviously, the Iran war was the big shock. But actually, to me, the big surprise has been the resilience of the US economy with the US front end now repricing the most in G10 rate markets. Adash, was that the main

driver of your bullish dollar turn at the beginning of May? Thanks, Ralf. Yes, it was. There were a number of other reasons that I'll mention briefly. But what we observed towards the end of April and early May was the US resilience that you're talking about. But when we think about FX markets, it's always about the US versus the rest of the world. So a chart we used quite frequently was showing US data surprises versus data surprises in the rest of the

world were essentially the highest or the widest we had seen for several years. Yet, if you looked at US rate differentials compared to the rest of the world, we hadn't seen much of a move. And I'm sure Mark would go into that in more detail. There were several reasons for that. But our view was very simple, that ultimately both the rate differentials and therefore the FX markets would eventually move towards pricing in this very persistent US economic resilience that we were observing.

It took a while. And of course, it took Fed Chair Walsh's press conference for the dollar to break out of its range. But that has happened. When we look at the chart right now, there has been some convergence, but there's probably further to go, especially under our base case of three rate hikes. And then very quickly, there were a couple of other reasons. There was seasonality, May tends to be seasonally positive for the US dollar. And I would flag our colleague, our technical strategist, Paul Siena, was flagging on the charts that the chart patterns were looking very similar to 2018,

when there was a break higher in the US dollar. And that was a big part of the reason why we were constructive on the dollar heading into the summer. Thanks. Mark, Adash just mentioned it. Our economists have now penciled in three hikes for the Fed, basically arguing for a reversal of the insurance cuts that Powell delivered in 2025, given that the labor market no longer looks soft. What does that mean for your dollar rate forecasts? What's...

Mid-year review

Transcript

Built for investment professionals

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

Mid-year review

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.