US Treasuries volatility surged to a nine-month high as the Iran war stoked inflation concerns and disrupted traders' expectations for Federal Reserve policy. The MOVE index, which measures Treasury market volatility, jumped sharply as geopolitical tensions rattled financial markets. Investors are reassessing the Fed's path forward amid fears that conflict in the Middle East could drive up energy prices and inflation.

Traders had been positioning for potential Fed rate cuts, but the war risks have complicated that outlook. The sudden spike in volatility reflects growing uncertainty about how the central bank will respond to inflationary pressures from the conflict. Market participants are now grappling with the possibility that the Fed may need to maintain higher rates longer than previously expected.

The volatility surge underscores how quickly geopolitical events can upend market assumptions. With inflation already elevated, the Iran conflict adds another layer of complexity to the Fed's policy decisions. Traders are now focused on upcoming economic data and central bank communications for clues about the Fed's next moves in this uncertain environment.