Duration offers an opportunity as odds grow for Iran off-ramp

Sovereign bond yields have moved sharply higher as oil prices remain elevated and the conflict in the Persian Gulf keeps inflation and supply risks front and center.

Stronger U.S. growth, resilient consumer demand, and continued AI-driven spending are helping support markets, but they are being offset by tougher central bank rhetoric and growing fiscal strain from higher borrowing costs.

The main swing factor remains the Iran dispute, especially any progress toward reopening the Strait of Hormuz or reaching a credible deal on nuclear negotiations.

With yields already near key levels, recent weakness may create a tactical opportunity in duration if diplomacy improves and inflation fears ease.