The rates market views this as a global inflation shock. A geopolitical risk-driven rise in oil prices is a stagflationary shock. The market is myopically focused on the inflation side, but high oil prices are also a tax on the consumer and will be a drag on growth if sustained.

I don't think any central bank, particularly the Fed with its dual mandate, is likely to not cut rates. We still think the Fed is likely to cut rates later this year.

This is an opportunity. Value is being created in bonds. Owning short-duration Treasuries is a hedge against growth slowing and credit fears.

Despite credit fears and heavy supply, new issue concessions were not high and post-pricing performance was excellent. There are inflows into investment-grade bond funds.

Upcoming Fed meeting will be 'wait and see'. There's a clear division at the Fed between those nervous about employment and those worried about inflation; the stagflationary shock has strengthened that division.

The dot plot will likely signal further rate cuts because the majority of the committee still thinks policy is slightly restrictive. As long as the Fed signals a path towards cutting rates, that will cap how high the 10-year yield can go.