Mizuho Securities: If Situation in Iran Stabilizes, Risk Premium on U.S. Treasury Yields Expected to Narrow Further

Mizuho Securities stated that recently, as markets perceive the Iran conflict to be nearing its end, the embedded risk premium in U.S. Treasury yields has narrowed, though these risk premiums remain substantial. Hidehiro Joke, Senior Bond Strategist at Mizuho Securities, said, "U.S. Treasury yields have indeed retreated recently, particularly noticeable in longer-dated instruments like the 10-year, but they still carry a quite significant risk premium. If the situation truly stabilizes and things begin to return to normal, I expect yields to decline further from their current levels. Given that the Federal Reserve has already cut rates several times and funding costs have also decreased, some investors may be willing to buy on dips to capture coupon income."