SEB: Middle East conflict may push up US and German two-year government bond yields

Golden Ten Data, March 6 – SEB Chief Rate Strategist Jussi Hiljanen stated in a report that if the Middle East conflict evolves into a prolonged confrontation, the yield on the US 2-year Treasury note could rise to 3.80% to 4.00%. Meanwhile, the yield on the German 2-year government bond could increase to 2.70% to 2.80%. He pointed out that in the US, a rapid rise in short-term yields may initially lead to a flattening of the Treasury yield curve, but if "the market does not price in a growth collapse scenario," a subsequent rapid rise in long-term yields could steepen the curve.