US-Iran Tensions Spark Global Market Sell-Off Amid Inflation Concerns

Asian share markets slid on Monday as fresh fighting between the United States and Iran lifted oil prices, while bond yields remained elevated after investors narrowed their odds of a US rate hike.

Brent futures rose 1.4% to $89.38 per barrel after US forces struck two of Iran's launchers on its island of Larak on Sunday, prompting retaliation from Iran against US forces in Jordan, according to Fox News.

The risk of inflation kept bond markets on edge following a speech by Federal Reserve Chair Kevin Warsh, who emphasized the central bank's work to control inflation. Markets reacted by increasing the probability of a September rate increase to 57%, pushing short-term Treasury yields sharply higher and flattening the curve.

Michael Feroli, chief US economist at JPMorgan, said 'we continue to expect that a hike won't come until December, though agree that the September meeting is live.' He added that regardless of the exact timing of hikes, Warsh's speech suggested a chair more willing to translate his concern about inflation into policy tightening.