Trump stated that Iran’s key nuclear enrichment facilities had been “completely destroyed” and warned of “much greater” attacks if Iran refused to agree to peace. In response, Iran declared it “reserves all options,” vowing retaliation. As tensions escalate in the Middle East and fears of a broader conflict grow, demand for safe-haven assets has risen, strengthening the US Dollar against the British Pound.

The yield on the 10-year US Treasury note held steady around 4.40% on Monday, remaining in a tight range for over a week as investors weighed the implications of escalating geopolitical risks. The weekend strikes, in which the US joined Israel’s conflict with Iran by targeting three nuclear facilities, have heightened concerns over possible Iranian retaliation, threats to US personnel, and potential disruptions to oil shipments through the Strait of Hormuz. Meanwhile, the Federal Reserve kept interest rates unchanged last week, maintaining a cautious, data-driven approach. Fed Chair Jerome Powell also warned that the recent tariffs imposed by President Trump could drive inflation higher in the months ahead.

In Japan, the 10-year government bond yield rose above 1.41% on Monday, snapping a three-day decline as markets reacted to upbeat business activity data. June’s Purchasing Managers Index (PMI) revealed that the manufacturing sector returned to growth for the first time since May 2024, while the services sector continued expanding for a third straight month, pointing to sustained economic momentum. Data released last week showed Japan’s core inflation climbing for the third month in a row, reaching 3.7% in May, the highest level since January 2023. The persistent inflation trend has bolstered expectations that the Bank of Japan (BoJ) will proceed with further policy tightening. Meanwhile, investors remain alert to rising geopolitical tensions in the Middle East.

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