Agrees macro is overshadowed. Economy chugging along, jobless claims low/in-line, CPI shows inflation humming with no major uptick, but market is focused forward on oil and Middle East outlook.

Key focus is Middle East developments. Higher oil prices could raise inflation, leading to longer-term bond yields moving up a little. Short-term TIPS breakevens are elevated, longer-term remain in check. This likely puts a floor under how much lower long-term yields can go. The recent ~4% low might be the near-term cycle low; expects yields to move rangebound or a little higher.

Would not be surprised if bonds post positive returns for the year. Higher yields provide better entry point/starting yield, which bodes well for long-term total returns. Advises hunkering down in fixed income with Treasuries, MBS, TIPS, investment-grade corporates/munis, and taking credit risk cautiously.