US Strikes on Iran Trigger Global Market Selloff

Global stock and bond markets plummeted Tuesday and Wednesday following a series of US military strikes against targets in Iran. Donald Trump characterized the operations as retaliation for Iranian attempts to mine the Strait of Hormuz and an attack on a military base in Jordan. The strikes, which targeted the Islamic Revolutionary Guard Corps in southern Iran, ended a month of relative inactivity in a conflict lasting over six months.

The geopolitical escalation drove Brent crude above $96 per barrel and West Texas Intermediate above $90, the highest level since July. The closure of the Strait of Hormuz, a critical chokepoint for 20% of global oil, intensified fears of supply disruptions and resurgent inflation. Consequently, global bond yields surged to levels not seen since 2008, with Japan's 10-year government bond yield crossing 3 percent for the first time since 1996.

Wall Street suffered three consecutive losing sessions, with the Dow Jones Industrial Average dropping over 400 points and the Nasdaq sliding 1% as rising yields pressured technology stocks. Asian markets also slumped, with South Korea's Kospi and Japan's Nikkei 225 falling approximately 3% and 2.2% respectively. Investors have increased bets to roughly 67% that the Federal Reserve will hike interest rates at its September 16 meeting to combat inflation, which remains above 3%. While Treasury Secretary Scott Bessent dismissed market concerns, stating higher energy prices would fade, the US national debt surpassing $40 trillion further fueled the bond sell-off.