Jefferies’ David Zervos on bonds: Good levels for long-term investors to get involved in bond market

Summary

David Zervos discusses oil and bond markets after Treasury Secretary Bessent's remarks. He agrees oil could drop sharply if the conflict ends but says timing is uncertain. He argues that higher Treasury yields reflect rising real rates and productivity investment rather than inflation or Fed credibility problems, making bonds attractive for long-term investors.

• David Zervos agrees with Treasury Secretary Bessent that oil could fall sharply once the conflict ends, but timing is uncertain.
• He believes current bond yields are attractive entry levels for long-term investors.
• The yield rise is driven by higher real rates and a capital call, not inflation expectations or Fed credibility issues.
• Long-run investment spending is expected to have disinflationary consequences.
• He says September rate-hike excitement is overblown but not impossible.
• He argues productivity gains are real, with AI as a significant contributor, though commodity and labor cost pressures exist.