The 10-year U.S. Treasury, German Bund, and U.K. gilt yields climbed to 4.636%, 3.114%, and 5.045% respectively, as investors brace for potential inflation shocks. Patrick Munnelly of Tickmill Group noted that the spike in oil prices has effectively dismantled recent market stabilization, pushing traders back into defensive positions. This instability coincides with a critical week for monetary policy, featuring upcoming U.S. inflation data and testimony from Federal Reserve Chairman Kevin Warsh.

Adding to the uncertainty, President Trump has proposed a 20% cargo fee for ships seeking safe passage, a move analysts call a departure from long-standing Western commitments to maritime freedom. Mohit Kumar of Jefferies highlighted that this shift is catching investors off guard, while economists warn that sustained hostilities may force the Federal Reserve to adopt a more hawkish stance. Simon Ballard of First Abu Dhabi Bank cautioned, however, that monetary policy remains a blunt instrument when confronting supply-side shocks driven by geopolitical conflict rather than demand-side distortions.