Monetary Policy & Inflation

30-year U.S. Treasury yields have surpassed 5% and UK gilts are at 1990s highs, as Powell's Fed departure and record sovereign debt trigger a global bond selloff. Services inflation above 3% and Iran-driven gasoline costs up $857 annually block a clean rate-cut path. Investors face mounting pressure to shorten duration and reprice credit risk across sovereign and corporate fixed income.

Iranian attacks drove European gas prices up 85% and oil above $80, triggering a 2.5% S&P 500 drop and 12% plunge in Korean stocks. The energy shock forces the Fed to choose between fighting inflation and supporting financial stability. Former Fed officials are reviving discussion of a Fed-Treasury coordination framework to manage the crisis.