Financial markets react to Middle East conflict and inflation fears

Financial markets are reacting to the conflict involving Iran, with investors worried it could push inflation higher. This has led to a sell-off in government and municipal bonds, causing their prices to fall and their yields (which move opposite prices) to rise. Mortgage rates have also climbed to their highest level in over three months.

These moves reflect a broader concern that central banks, like the Federal Reserve, might delay planned cuts to interest rates or even consider raising them again to combat potential inflation from the conflict. This reassessment is putting pressure on both stock and bond markets as investors adjust their expectations.