Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
The retreat in tail risk concerns over Greece and China prompted a selloff in JGB markets at the start of the week in reaction to the previous week's flight to quality. Once the big events of the week (Chinese GDP release, BoJ Monetary Policy Meeting, Fed Chair Yellen's testimony) had passed on 15 July, the curve experienced a slight bull flattening on hopes of a summer rally. However, in the end moves remained within the range of the past month.
Barclays notes:
- We expect monetary policy to remain unchanged for the foreseeable future barring a potential shock from a large fall in survey-based inflation expectations.
- More than the policy reaction function of the Fed and BoJ, we believe the high level of uncertainty in the economy itself will likely ensure a bull flattening or bear steepening, and an inverse correlation in the performance of stocks and bonds.
- As such, we believe that any summer rally is likely to prove short-lived.
- We continue to recommend a core position of 5yf5y swap plus buy 20y JGB, along with a short-term position of a futures/20y flattener and 1m20y receiver 1x2.
