SEB Analyst Predicts Potential Rise in U.S. and German Bond Yields Amid Middle East Conflict

SEB's Chief Rate Strategist, Jussi Hiljanen, has indicated that a prolonged conflict in the Middle East could lead to an increase in U.S. and German bond yields. According to Jin10, Hiljanen's report suggests that the yield on the U.S. 2-year Treasury could rise to between 3.80% and 4.00%. Concurrently, the yield on Germany's 2-year government bonds might increase to between 2.70% and 2.80%. Hiljanen noted that in the U.S., a rapid rise in short-term yields could initially flatten the yield curve. However, if the market does not price in a scenario of economic collapse, a subsequent rapid increase in long-term yields could steepen the curve.