Treasuries Rebound as Middle East Tensions Stoke Demand for Havens, Partially Restoring Rate Cut Hopes

Treasuries rallied sharply Friday, paring the steep weekly loss caused by US inflation data, as demand for havens grew amid anticipated Middle East conflict
Yields on 2- to 10-year notes tumbled up to 10 basis points following reports Israel is bracing for a possible attack from Iran
The bond rally comes after Treasuries' worst two days since February, when yields reached year-to-date highs following inflation data
Friday's flight from risk assets partially restored expectations for Fed rate cuts, with markets pricing in close to 50 basis points of easing by year-end
The 10-year yield dipped below 4.5% for the first time since Wednesday's CPI data release, trailing steeper declines in euro zone bond yields