A just-published report argued that the Middle East war, rising bond yields and U.S. policy uncertainty pose tests of investor confidence in the near term. Investors are grappling with an escalation of the war, which contradicts earlier expectations that the Trump administration would seek to wind it down ahead of the mid-term elections.
In the meantime, the increase in oil prices has coincided with a rise in G7 inflation expectations and continued upward pressure on bond yields. Indeed, U.S. Treasury yields rose even as Treasury Secretary Bessent raised purchases of 10- and 20-year bonds to US$6 bn from US$ 4bn.
