Which bonds should investors buy after the rise in Treasury yields?

Markets have shifted from expecting multiple Fed cuts to pricing in no easing this year, largely because the oil shock has lifted near-term inflation and pushed Treasury yields higher. That move has flattened the curve, but long-term inflation expectations remain relatively contained, suggesting investors still view the disruption as temporary rather than structural.

If tensions ease and oil prices retreat, inflation pressure could cool quickly and give the Fed room to cut rates later this year or into next year. We also see signs that positioning is crowded against bonds, which could fuel a sharp rally if sentiment turns.

For investors, short- to intermediate-term bonds look attractive at current yields near 4%. They offer income today and potential price upside if growth softens and policy begins to ease again.