DBS Bank: US Treasury yields could fall to 4% if Iran responds to attacks

Rising tensions in the Middle East could spur a rise in 10-year Treasuries, with yields likely to fall to around 4 per cent, according to DBS. "With the Middle East in a tit-for-tat escalation, long-term Treasuries will rebound strongly, led by safe-haven buying," he said. "If Iran decides to respond to the attack in another round of escalation, we could see US 10-year yields fall to 4 per cent. In addition, oil prices could rise sharply in the short term on fears of supply disruptions in the Strait of Hormuz. If disruptions materialise and oil prices continue to rise, this could also exacerbate inflation risks and limit the Fed's rate cuts."