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Iran Conflict Stokes Inflation Fears Across Global Markets

Geopolitical tensions in the Middle East are reshaping inflation expectations and bond valuations worldwide. Energy price volatility stemming from the Iran situation is pressuring central banks to reassess monetary policy stances. The Bank of England's chief economist has advocated for rate increases to combat resulting inflation spillovers. Emerging markets face particular vulnerability, with Angola's bond market facing headwinds as import costs rise amid currency pressures. Consumer-facing businesses are already showing strain, with discount retailers reporting sales slowdowns as shoppers contend with elevated price levels. Portfolio managers who positioned for sustained inflation earlier in the year are seeing their contrarian bets vindicated as bond markets reassess rate-cut expectations. The outlook hinges on how long regional hostilities persist and their impact on global energy supplies.