U.S.-Iran Negotiations Collapse Boosts Inflation Expectations: Rate Cut Bets Postponed, Global Bond Markets Under Pressure

Mars Finance News, on April 13, the breakdown of negotiations between the United States and Iran, combined with the potential blockade risk of the Strait of Hormuz, has triggered market concerns over rising energy prices and inflation, further weakening expectations for the Federal Reserve to cut interest rates this year. Currently, traders have postponed the next rate cut to mid-2027.
Latest data shows that the US March CPI increased by 0.9% month-on-month, the largest gain since 2022, pushing the 10-year US Treasury yield above 4.3%, and further rising to about 4.35% in the latest trading session.
Meanwhile, the 10-year Japanese government bond yield rose to a new high since 1997, and bond yields in Australia and New Zealand also increased in tandem, putting pressure on global bond markets overall.
Institutional views generally believe that rising energy prices constitute a “supply-side inflation shock,” and with the labor market still resilient, the Federal Reserve currently lacks urgency to cut rates in the short term.
Institutions such as PIMCO, Brandywine Global, and Natixis tend to remain on the sidelines, waiting for a clearer inflation trajectory.
Market narratives have shifted from recession fears to inflation dominance; if oil prices remain high, it could further prolong the high-interest-rate environment cycle and suppress the overall performance of financial assets.