The Iran war has been the primary driver behind the recent surge in global interest rates, overshadowing Federal Reserve actions. Since the conflict began in late February, bond markets have pushed longer-term rates higher, anticipating sustained inflation. The benchmark 10-year Treasury yield hovered near 5 percent, while 30-year yields approached 5.3 percent.

Energy prices, already sensitive to the Ukraine war, accelerated inflationary pressures. Consequently, mortgage rates neared 7 percent, and costs for credit cards and student loans escalated. Central banks in Tokyo, London, and Brussels have responded by raising shorter-term rates.

Despite market turmoil, the global economy continues to expand, though rising rates and soaring energy prices cause hardship worldwide, with protests reported in Indonesia, Guatemala, and Syria. With midterm elections approaching, the trajectory of inflation and energy costs remains a critical issue, as central banks find their power constrained by geopolitical factors beyond their control.