There is zero chance the Federal Reserve can constitute an interest rate cut in the near term. The way things are going it looks like it will be a jump in inflation. A sustained oil shock creates stagflation (low growth, high inflation). Central banks cannot cut rates to save the economy if inflation is spiking due to energy costs. This "higher for longer" rate environment will cause long-duration Treasury yields to rise and their prices to fall. SHORT. Long-duration government bonds will lose value as inflation expectations are repriced higher and rate cut hopes are abandoned. If the energy shock causes a severe and immediate global deflationary recession, investors may panic-buy long-term Treasuries as a safe haven, driving prices up despite inflation fears.