The Curve Is Still Steepening—And That’s Not an Accident

The latest CIO view reads like a quiet admission that the bond market is not done adjusting to a more politicised macro regime. 

• The report argues that yield curve steepening is far from over, driven by a rebuilding term premium and growing fiscal pressure—particularly in the U.S. and Japan.
• Long-end yields are being pushed higher not just by inflation risk, but by structural issuance tied to defense, infrastructure, and energy transition spending.
• Despite this, investors are not turning defensive. The stance remains modestly risk-on, with equities still preferred over duration, and a focus on regional and sector positioning rather than broad exposure.

The key shift is subtle: this is no longer a pure monetary cycle. Fiscal gravity is starting to dominate the shape of the curve.