US-Iran Conflict Triggers Historic Bond Yield Surge as Brent Crude Hits $78

Military clashes between the US and Iran sparked the largest two-day spike in bond markets in months, while Brent crude oil surged to $78 per barrel amid Hormuz Strait shipping disruptions. Geopolitical tensions have forced central banks to reassess inflation projections.

Geopolitical Tensions and Bond Market Shockwaves

■The 10-year US Treasury yield retreated to 4.54%, near its two-month peak.

■Germany’s 10-year Bund yield climbed to 3.033%, hitting a seven-week high.

■Two-year US Treasury yields stabilized at 4.18%, reflecting short-term Fed rate expectations.

Brent Crude’s Energy Market Response

■Hormuz Strait blockades pushed Brent to $78, a 4.5% increase.

■Energy-driven inflation risks triggered volatility in fixed-income securities.

■IMF’s growth revision added pressure on emerging currencies like the Turkish lira.

Central Banks’ Strategic Adjustments

■Markets briefly paused after aggressive sell-offs, betting on the Fed’s neutral stance.

■Ongoing conflicts now challenge prior assumptions on inflation trajectory.

■The EU emphasized strategic petroleum reserves amid energy supply concerns.

Ozan Demirci: Geopolitical shocks are reshaping not just bond yields but also liquidity dynamics in commodities. Brent’s rally directly increases energy import costs for FX reserves. Central banks may need emergency liquidity injections to stabilize markets.