Bond Markets Outpace Central Banks: Rate Cut Hopes Fade Amid Oil Shock

• Bond markets are reacting to inflation fears from rising oil prices, while central banks remain cautious.
• US Federal Reserve kept rates unchanged, acknowledging West Asia conflict muddies outlook; other central banks also held rates.
• Probability of rate cuts has sharply dropped, with odds of a hike increasing, reflecting market uncertainty.
• US 10-year yield climbed, defying typical geopolitical safe-haven demand for bonds, due to inflation concerns.
• Analysts warn prolonged oil disruption could lead to recession, putting central banks in a difficult position between inflation and growth.