Asia Markets Slide as US-Iran Tensions Fuel Inflation Fears
Share markets in Asia took a hit on Monday as fresh tensions between the US and Iran lifted oil prices. The Brent futures price rose by 1.4% to $89.38 per barrel after US forces struck two of Iran's launchers on its island of Larak on Sunday, prompting retaliatory attacks from Iranian forces.
The resulting risk of higher inflation kept bond markets on edge as Federal Reserve Chair Kevin Warsh emphasized the central bank's need to control inflation in a recent speech. This has pushed up the probability of a September rate hike to 57%, causing short-term Treasury yields to surge and flattening the yield curve.
Analysts predict that the outcome of Friday's August payrolls report and consumer price data due on September 11 will be key in determining whether an early hike is necessary. The Bank of Canada, however, may hold off on raising rates due to concerns about a trade war with the US.