Wall Street spent early summer bracing for rate cuts. Then Iran happened (again). Renewed US strikes sent oil prices surging, pushing the 30-year Treasury yield above 5% and toward its highest level since 2007. Bond traders are now betting the Fed hikes before it ever gets the chance to cut.

• Retaliatory Houthi attacks sent Brent crude beyond $100 a barrel, lifting the odds of a July Fed hike to 35% — up from ~10% a week ago.
• As such, the 2-year and 10-year Treasury yields hit their highest rates since early 2025, with the former surging to 4.34% and the latter touching 4.7%. 

Feeling the pinch: The real-world fallout is already landing. Rising yields are pushing up mortgage rates and undercutting stocks — the S&P 500 is roughly flat this month, and the Nasdaq dropped 0.6% Wednesday. Jobless claims fell to 187K, below the expected ~210K, signaling a resilient economy that gives the Fed cover to prioritize inflation over jobs. Meanwhile, a September rate hike is now fully priced in, as all eyes shift to Friday's S&P Global Flash PMI ahead of the Fed's July 28–29 decision.