Published research is split on US bonds, but the near-term lean is toward higher yields — with pockets of opportunity in short-dated Treasuries and investment-grade credit.
The bearish-for-bonds case, argued across several recent research notes, is that sticky inflation and a resilient labor market keep the Fed hawkish, with futures markets pricing nearly 60% odds of another hike by year-end. One thread warns that any softening of Fed forward guidance could lift term premia and push long yields higher still. A standout hawkish call from one published view sees the 10-year heading toward 6% within a year, citing pre-2008-style lending excesses.
The bullish counter, from a contrarian camp of analysts, argues markets have overpriced further hikes. They favor the front end — pointing out 2-year yields sit more than 50bps above the Fed funds lower bound — and flag slower real wage growth and emerging labor slack. Others recommend rotating into investment-grade bonds at 4.5–5% starting yields, arguing fixed income is undervalued here.
A conditional bullish catalyst flagged in recent research: a reopening of the Strait of Hormuz could cool inflation expectations.