Bonds Drop and Oil Rises as US-Iran Attacks Increase – Asia Market Wrap

Oil jumped to its highest in over a month and bonds sold off Monday as US-Iran strikes escalated, reviving inflation worries, while stocks steadied after last week’s tech-led drop.

Brent gained as much as 3.8% to $91.42/bbl, the highest since June, as strikes expanded beyond military targets. 10yr Treasury futures fell 7/32, with the cash market shut for Japan’s holiday. Aussie and NZ bonds also fell on inflation concerns tied to the oil move.

Equities were mixed. Nasdaq 100 futures rose 0.5%, clawing back some of Friday’s selloff, which was sparked by Moonshot AI’s model breakthrough that challenged assumptions about US AI leadership. The Kospi dropped 3.7% as Korean traders returned from a holiday; broader Asia was little changed.

The Mideast escalation is compounding jitters already stirred by the tech selloff, with investors questioning whether AI spending can keep justifying the sector’s gains. Rising oil is also putting inflation back in focus, cutting against last week’s data showing June CPI fell for the first time in six years, with core inflation little changed.