US-Iran Escalation Sends Global Markets into Free Fall
Global stock markets fell sharply on Wednesday as tensions between the US and Iran escalated, driving up oil prices to a five-week high. The latest airstrikes by the US pushed Brent crude futures to $94.87 per barrel, while investors grew increasingly worried about energy supplies and rising inflation.
The US carried out strikes on Iranian military targets near the Strait of Hormuz, with Iran responding by targeting US assets across the region. This marked the most significant round of fire between the two sides in several weeks, sparking concerns about further disruptions to oil supplies.
The sharp rise in oil prices added to an ongoing global bond selloff, with the US 10-year Treasury yield reaching its highest level in almost three years at 4.8122%. Japan's 10-year government bond yield also stayed above 3% for the second day in a row, following similar concerns about inflation.
Markets are now closely watching economic data ahead of the Federal Reserve's September 16 meeting, as investors bet on another US interest rate hike. The probability of a 25-basis-point rate increase this month jumped to 68%, up from 37% just a week earlier.