Iran Shock ‘Long-Term Bullish' for Treasuries, BMO's Lyngen Says

• The US is in a specific situation due to the Fed's dual mandate and labor market uncertainty, while Europe and the UK's yield moves are more understandable.
• Uncertainty in the Middle East could drive oil prices to $125-$130/barrel, leading to consumer stress and undermining the strong US growth argument.
• A flatter yield curve is expected, with 10- and 30-year Treasuries outperforming as the Fed fights inflation and potentially delays rate cuts.
• Long-term bullish outlook for Treasuries, with 10-year yields potentially falling below 4% by year-end, though the 2-year sector is expected to struggle.

Ian Lyngen of BMO Capital Markets discusses the impact of surging energy costs and inflation fears on global bond yields. He anticipates a flatter US yield curve, with long-term Treasuries outperforming short-term ones, and maintains a long-term bullish outlook for Treasuries despite near-term volatility.