Global Markets React to Geopolitical Tensions, Rising Energy Prices, and Shifting Monetary Policy Expectations

Renewed U.S.-Iran strikes have led to a volatile market session, with energy prices rising (Brent oil and TTF gas around $90 and €70, respectively). Stock markets declined, and the U.S. dollar weakened against major currencies, while the euro strengthened above $1.16. Sovereign yields in the U.S. and Europe increased, with 10-year Treasuries and Bunds reaching their highest levels since early 2025 and late 2011, respectively. Market-implied probabilities for 25 basis point rate hikes by the Federal Reserve and the European Central Bank in their September meetings rose to 65% and 99%, respectively. China's official composite PMI for August remained below the 50-point threshold at 49.5.