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Sign InThe bond market experienced a violent selloff as investors reacted to the dual pressures of escalating geopolitical conflict and a leadership transition at the central bank. According to reports, concerns over the ongoing war with Iran combined with the policy direction of the new Federal Reserve Chair, Kevin Warsh, triggered a sharp decline in bond prices. This market reaction follows data showing US inflation hitting a three-year high, intensifying the shift away from fixed-income assets.
This volatility in US Treasuries coincides with broader global inflationary trends, with market data showing Canada's annual inflation at 2.8% on May 19, 2026, and Eurozone CPI holding at 3% as of May 20, 2026. Energy markets have added to the turmoil, following a reported 9.1 million barrel drop in US API crude oil stocks on May 19, which has kept upward pressure on fuel-driven inflation expectations.
Investors are now focused on the FOMC Minutes scheduled for release on May 20, 2024, for clues on how the Fed under Warsh will navigate these inflationary shocks. Additionally, the upcoming Manufacturing and Services PMI data on May 21 will be a critical catalyst, as markets assess the impact of higher yields on global economic growth and risk appetite.