Oil prices spiked to $119 per barrel as fears of Iranian strikes on Gulf facilities grew, then slipped to $103 after Israeli Prime Minister Benjamin Netanyahu claimed Iran could no longer enrich uranium or build ballistic missiles. The rally coincided with a sharp rise in short‑term interest rates worldwide, unsettling bond markets that had been pricing a swift end to the conflict.

U.S. two‑year Treasury yields jumped, reflecting market assumptions that the Federal Reserve may need to tighten sooner than expected. BNP Paribas’ Calvin Tse interpreted the move as a “symmetric bias” toward inflation risk, noting Fed Governor Christopher Waller’s silence on rate cuts. BlackRock’s Rick Rieder warned the bond market may have over‑reacted to the unprecedented supply shock.

In Europe, the ECB lifted its inflation outlook while the Bank of England kept rates at 3.75% but scrapped guidance for a near‑term cut, sending two‑year gilt yields up 30 basis points in a single session. Japan’s short‑term rates stayed steady, reflecting already‑oversold JGBs and subdued inflation. The episode shows how geopolitical risk can trigger rapid shifts in short‑end yields, pressuring investors across asset classes.