Bonds in Limbo as Middle East Tensions Linger

The global bond market remains in limbo as investors wait for clarity on the Middle East situation and its impact on oil prices. The Strait of Hormuz has seen relatively light traffic despite the ongoing tensions between the US and Iran.

The Federal Reserve kept interest rates unchanged at 3.50% to 3.75%, while regional central bank presidents called for a 25-basis-point hike in key rates. The Bank of England and the Bank of Japan also refrained from making any significant moves.

Elsewhere, the US economy grew at a slower pace in Q2, expanding by 1.5% annually, while the eurozone saw a stronger-than-expected growth of 0.4%. Inflation in Germany picked up due to the removal of a gasoline tax rebate, but core inflation retreated.

Looking ahead, investors will be focusing on developments in the Middle East and trends in commodity prices. The US jobs report for July is set to be a key highlight, with sentiment indicators suggesting robust job growth. Regional leading indicators also point to an increase in ISM indices for both manufacturing and services sectors in July.