UBS expects the 10-year US Treasury yield to test 4.5%, and German bonds are expected to outperform.

Due to the risk of rising energy prices, UBS remains cautious on the duration of US bonds and expects the yield on 10-year US Treasury bonds to test "at least 4.5%". The bank believes that German bonds will outperform. Reinout De Bock, head of European interest rate strategy, wrote in a report, "We expect the yield spread between US and German 10-year bonds to further widen this year," and the risk posed by rising energy prices to the US economy cannot be ignored. The bank recommends buying German bonds with a target yield of 2.75% and a stop loss position of 3.15%.