Global stock markets fall as US-Iran strikes push oil to $95, bond yields surge, Fed rate hike bets rise | Business News - Hindustan Times

The escalation between the US and Iran has triggered a classic risk-off reaction across global markets. Equities have fallen as investors reassess geopolitical stability, while the price of oil climbing to $95 per barrel is a key driver. Higher crude prices feed directly into inflation expectations, as energy costs ripple through production and transportation. This is why bond yields are surging: fixed-income investors are demanding higher compensation for the risk of sustained price pressures.

The shift in yields has also changed the outlook for monetary policy. Markets are now pricing a greater likelihood that the Federal Reserve will need to hike interest rates again to cool inflation, undoing earlier hopes for a pause. For stocks, the combination of higher energy costs, rising yields, and a more hawkish Fed tightens financial conditions and pressures equity valuations.

What to watch now are supply-side developments in the oil market, diplomatic responses from major powers, and any official Fed communication. These factors will determine whether the current moves are a temporary geopolitical spike or the start of a more lasting repricing of risk and inflation.