Bonds Drop as Israel-Iran Strikes Raise Inflation Fears

US stocks have staged a modest rebound even as flaring tensions in the Middle East sent oil prices and bond yields higher.

Futures for the S&P 500 rose 0.2% after a selloff in artificial intelligence stocks came to a halt.

Bond traders are wagering that inflation figures this week will show the biggest surge in consumer prices in several years, adding to pressure on the Federal Reserve to raise interest rates.

Global bond markets have seen a profound shift since late February, when the US and Israel's attacks on Iran sparked a surge in oil prices, derailing bets that the central bank was poised to lower rates in 2026.

Lindsay Rosner, Head of Multi-Sector Investing at Goldman Sachs Asset Management explains. (Source: Bloomberg)