Bond yields are coming back down as President Donald Trump’s war on Iran looks to keep oil prices higher for longer, flipping the outlook from high inflation to a recession.
Before the war, yields eased on expectations for Federal Reserve rate cuts as inflation cooled. Then the war drove up bond yields, after soaring crude rattled the outlook for inflation and the Fed. Now rate cuts are looking possible again.
With the Strait of Hormuz still firmly in Iran’s control, making the regime the gatekeeper to one-fifth of the world’s oil and liquefied natural gas supplies, the disruption to energy markets is too severe to be undone with a social media post from Trump.
Despite his claims that talks with Tehran are going well, oil continued rising on Monday with West Texas Intermediate up 2.7% to top $102 a barrel, and Brent crude up 1.7% to more than $114. At the same time, the 10-year…
