The conflict between the U.S. and Iran intensified with a new round of strikes, leading to a surge in oil prices and global bond yields. U.S. Central Command launched attacks on Iranian targets, including air defense and radar systems, while Tehran retaliated with a missile attack on Jordan. Brent crude futures jumped to $94.52 a barrel, and U.S. WTI futures hit levels not seen since July, reaching $90.03 per barrel, as traders priced in disruptions to oil flows through the Strait of Hormuz.
President Trump dismissed reports that he was trying to force Iran to the negotiating table, stating on Truth Social that he was not in a rush for talks and that the U.S. had "almost total control" over the Strait of Hormuz. He also suggested that Iran's economy was collapsing and called for the Iranian people to "rise up and fight." This stance indicates Washington's preference for maintaining pressure rather than seeking a swift diplomatic resolution.
The escalation in the Middle East, coupled with rising oil prices, fueled inflation concerns and influenced monetary policy expectations. Federal Reserve Governor Michael Barr indicated he would support a rate hike "if inflation appears not to be moderating sufficiently," echoing sentiments from Fed Chair Kevin Warsh. Markets are now leaning towards a quarter-point hike this month, with the benchmark rate already at 3.50%-3.75%. Global bond yields surged, with U.S. 10-year Treasury yields climbing to 4.80%, reaching their highest levels since January 2025, and borrowing costs in Japan and the U.K. also pushing towards multi-decade highs.
