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Market Extra: Oil’s rally challenges bond investors’ dim global economic outlook, says strategist

What is a steady rise in crude-oil prices telling investors about the health of the global economy? That is the question some bond investors are assessing, amid a recent rally in crude futures.

Arnim Holzer, a global macro strategist at EAB Investment Group, told MarketWatch that if the climb in oil is more pegged to supply constraints amid geopolitical jitters among oil exporters, Treasury yields are likely to stay lower.

However, if a six-month high in crude is more a function of increased industrial appetite for commodities and an indication that the international economic slowdown is approaching an inflection point, it could challenge the Treasury market’s downbeat assessment about the state of global growth, which has helped keep Treasury prices high and bond yields relatively low.

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