Volatility in global markets is pushing US bond yields higher, even as investors still expect the Federal Reserve to cut rates later this year, according to UBS executive director for equities Rob Taubman. Taubman noted that the key dynamic unsettling markets in early 2026 has been global capital flows rather than central bank policy. UBS is a global financial services company providing wealth management, investment banking, and asset management services.
“What we’re seeing is the bond market reacting to perceived risk,” Taubman stated. He explained that if investors are selling US bonds, interest rates can increase, regardless of expectations for Fed rate cuts. At the end of last year, markets anticipated a clear easing cycle as US jobs growth softened.
Taubman added that this narrative has been challenged in January as volatility has increased. “In November and December, most people believed the Fed would need to cut rates,” he said. “Now, with uncertainty rising, those capital flows are working in the opposite direction.”
While UBS still expects the Fed to ease policy this year, Taubman cautioned that rate cuts are only one factor influencing bond pricing. He stated that the economy and the Fed’s management of employment are important, but global capital flows are currently working against those factors.
