Will lower oil prices deck Treasurys?

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Rather than benefiting from lower inflation expectations, Treasurys may actually take a hit from lower oil prices, some analysts believe.

"A fall in the oil price will lower inflation in the near term, which helps to explain the sharp declines in breakeven inflation rates on Treasurys that we have seen in the second half of this year," John Higgins, chief markets economist at Capital Economics, said in a note Monday. "But it will also boost growth significantly, which helps to explain the simultaneous upward pressure on the yields of real U.S. government bonds, i.e. TIPS."

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The 10-year Treasury yield was trading around 2.26 percent Tuesday, down from around 2.6 percent at the end of June, while the 10-year TIPS, or Treasury Inflation Protected Security, was trading around 0.54 percent Tuesday, up from around 0.3 percent at end-June. Since this summer, Brent crude oil has fallen from above $115 per barrel to around $66.05 in Asian trade Tuesday, with many analysts predicting prices will continue to slide.

Swifter rate hikes

"The faster growth that results from a lower oil price will cause the rapidly diminishing amount of slack in the U.S. economy to be absorbed even more quickly," increasing the chances of more aggressive tightening from the Federal Reserve, Higgins said. Capital Economics expects the 10-year Treasury yield will climb to 4 percent by the end of 2016.

Forecasts that interest rate hikes could come more swiftly than the late 2015 many have penciled in has been gaining some traction.

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On Monday, the Wall Street Journal reported that at the next policy meeting, Federal Reserve officials may drop the words "considerable time" from its statement that short-term interest rates would stay around zero.

Faster growth

Others also see lower oil prices lighting a fire under U.S. economic growth prospects.

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"Just as a back-of-the-envelope calculation, the latest oil price decline (if not reversed anytime soon) would bring a US$500 extra pay check to the average household in the U.S. in 2015, via a lower energy bill," Julius Baer said in a note Monday.

The power of U.S. consumer spending is "sizeable," the bank said, noting that more than 15 percent of global gross domestic product in U.S. dollar terms in generated by American shoppers.

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There's another reason lower oil prices can weigh on Treasury prices, which move inversely to yields: "oil exporters typically save a larger share of their income than oil importers and are more inclined to put their savings into U.S. government bonds," Higgins noted. While lower oil returns can affect oil exporters' demand for Treasurys, he cautioned against overstating the impact as two of the largest oil importers -- China and Japan -- are among the biggest holders of U.S. government bonds.

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1