US bond markets split as Middle East war reshapes inflation growth bets

Investors are bracing for opposite outcomes from rates

As the Middle East conflict enters its ninth week, U.S. fixed-income markets are showing a sharp divide. Investors are split on whether the war will lift inflation, weaken growth, or force the Federal Reserve to adjust policy sooner than expected. That uncertainty is driving contrasting expectations across bonds, sending mixed signals into the wider stock market outlook.