Bank of America Global Research discusses UST outlook.

"US Treasuries remain historically cheap relative to domestic macro fundamentals, with our valuation frameworks continuing to point to attractive medium-term entry levels, and scope for a dip-buying stance," BofA notes.

"However, valuation arguments alone are not sufficient to take stance on duration. The utility of Treasuries as portfolio diversifiers has deteriorated as stock-bond correlations remain near their highest level since the late 1990s. The current valuation discount is likely to reflect this reduced utility, as investors are no longer willing to pay the same premium for duration's traditional hedging properties," BofA adds.