Yields rise, oil jumps; US and Iran resume military attacks - Reuters

The resumption of military attacks between the US and Iran has reignited geopolitical risk in financial markets. Investors responded by bidding up oil prices amid concerns over potential supply disruptions from the Middle East, a key producing region. At the same time, government bond yields moved higher, reflecting a notable shift in risk sentiment.

The rise in yields may appear counterintuitive, as geopolitical tension typically drives demand for safe-haven bonds, which lowers yields. However, an oil price spike can also stoke inflation expectations, prompting investors to demand higher compensation for holding longer-dated debt. This puts renewed focus on how central banks balance growth support against price stability.

Market participants will be watching for further escalation, diplomatic efforts, and oil inventory data. Equity and currency markets are also likely to remain sensitive to regional headlines. The key question is whether the oil price move proves durable and begins to affect broader macroeconomic expectations.