Middle East War Fears Drive European Markets to Seven-Month Low

After a week of intense focus on surging long-term U.S. Treasury yields, world markets are now turning their attention back to Middle East tensions. The bond market appears to be running scared, with the Federal Reserve indicating that it may need to tighten borrowing conditions to control inflation. However, rising market interest rates may also play a role. The resulting further disinversion of the yield curve and concerns about fiscal policy and debt supply have led to a shift in focus towards short-term safety hedges. Meanwhile, Wall Street futures remain in the red, and global stocks have fallen heavily.