While US officials confirmed that the US was not involved, the escalation unsettled global markets. Earlier in the week, yields were already trending lower due to growing uncertainty around trade policy after President Trump threatened unilateral tariffs to secure new trade deals. Additionally, soft consumer and producer inflation data further supported expectations of Fed rate cuts later this year.

Similarly, Japan’s 10-year government bond yield fell to around 1.4%, also a five-week low, as heightened geopolitical risks and global economic concerns drove demand for safer assets. Bank of Japan Governor Kazuo Ueda reiterated earlier this week that the central bank remains prepared to raise interest rates again if there is sufficient confidence that inflation will sustainably reach the 2% target.

Meanwhile, the US Dollar Index bounced back above 98.2 on Friday, recovering from multi-year lows as rising Middle East tensions increased demand for safe-haven currencies. The dollar had previously been under pressure due to concerns about Trump’s aggressive trade policies and disappointing inflation figures, which reinforced market expectations of more rate cuts from the Federal Reserve. Investors are now looking ahead to the University of Michigan’s June consumer sentiment report for further insight into how tariff concerns are affecting household confidence.

Check out the daily analysis of the day for more insights.