Core Viewpoint - The recent geopolitical crisis has put the traditional safe-haven status of the US dollar and US Treasuries to the test, with increasing skepticism about their reliability as safe assets [1][12]. Group 1: Market Reactions - Following Israel's airstrikes on Iranian targets, US Treasuries showed only a slight increase, and the dollar initially dropped instead of rising as expected for safe-haven assets [2][12]. - The volatility in the market was evident as the VIX index surged, global stock markets faced pressure, and oil prices spiked, while gold, another safe-haven asset, saw a strong rebound [1][6]. Group 2: Structural Issues with the Dollar - The dollar index has fallen approximately 8% this year, reflecting a loss of investor confidence in the US economic growth outlook due to various structural issues, including trade policies and fiscal deficits [13][14]. - Analysts suggest that the dollar's safe-haven status is being diluted by the US government's trade policies and challenges to the rule of law, leading to questions about its reliability [13][14]. Group 3: Shift in Investment Trends - There is a notable shift in capital flows away from US Treasuries towards hard assets like oil and metals, indicating a loss of confidence in sovereign debt as a risk-free haven [12][14]. - The current geopolitical tensions have led to a typical cross-asset reaction, with energy and gold prices rising sharply, while bond demand remains low [11][12].

Core Viewpoint - Despite recent market volatility easing, investors remain concerned about the safe-haven status of U.S. Treasuries, particularly regarding the direction of U.S. fiscal policy [1] Group 1: Investor Concerns - Investors are anxious about the potential for rising bond term premiums, which could lead to a steeper yield curve and increased worries about Treasury auction outcomes [1] - There is a possibility of credit rating downgrades for U.S. Treasuries, adding to investor unease [1] Group 2: Yield Curve Expectations - The yield curve for U.S. Treasuries is expected to steepen further, indicating an increase in the difference between short-term and long-term bond yields [1] - The U.S. Treasury may implement measures to lower financing costs, suggesting a greater reliance on Treasury supply in the coming years [1] Group 3: Treasury Auction and Supply - There is a potential for a reduction in the scale of long-term Treasury auctions, reflecting the changing dynamics in the market [1]