According to recent inflation trends, UBS has provided recommendations for inflation bond trading strategies in the United States, Europe, and the United Kingdom. Overall, UBS suggests a bullish outlook on U.S. breakeven yields, believing that there is no unexpected downward pressure on short-term inflation data in the U.S. Additionally, with the stock market pricing in the expectation of higher economic growth in Europe, the bank is also bullish on real interest rates in the Eurozone. Furthermore, due to the interplay of trade and fiscal financing, UBS maintains a neutral view on the UK's real interest rates and breakeven yields.
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U.S. breakeven yields have fallen alongside the U.S. stock market, with economic growth sentiment continuing to deteriorate. However, at this point, there is almost no further evidence of decline in the data, aside from the pessimistic sentiment in the financial markets. Breakeven rates are at historically low levels. However, if weak economic growth is causing concerns in the stock market, expectations for the Federal Reserve to cut interest rates are likely to be further realized: there may be more rate cuts this year than the anticipated 70 basis points; TIPS at least indicate that inflation risks are very mild and may be transitory, easily identifiable by the Federal Reserve.
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European breakeven yields remain low. The cheap short-term breakeven bonds contradict the feeling that Europe can maintain high growth and inflation, which is evident in the rising interest rates and stock market. Despite trade risks next month, UBS believes this situation will continue.
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The UK's breakeven yields have been weak, possibly due to supply and correlation with the U.S. (a rare occurrence). The subsequent spring fiscal activity may lead to a significant decline in bullish positions and breakeven yields, despite greater financing needs. This should be favorable for long-term real interest rates.
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UBS released a global inflation bond trading strategy, recommending a bullish outlook on U.S. breakeven yields, believing that there is no downward pressure on short-term inflation data. At the same time, it expects real interest rates in the Eurozone to rise due to market expectations of high economic growth. It holds a neutral view on the UK's real interest rates due to the impact of trade and fiscal financing. Despite the decline in the U.S. stock market and breakeven rates being at historical lows, UBS believes that the Federal Reserve may cut interest rates by more than 70 basis points

How to bet on inflation in Europe and the United States? UBS provides a "trading guide"