Federated Hermes senior fixed-income portfolio manager Karen Manna said in a report that the most significant change in the fixed-income market in 1H 2026 was the return of inflation expectations. Historically, geopolitical shocks drove safe-haven flows into U.S. Treasuries and pushed yields lower. After the Iran conflict erupted, however, inflation concerns dominated and pushed yields higher — especially at the short end of the curve. Market pricing shifted materially: markets stopped pricing m

Federated Hermes senior fixed-income portfolio manager Karen Manna said in a report that the most significant change in the fixed-income market in 1H 2026 was the return of inflation expectations. Historically, geopolitical shocks drove safe-haven flows into U.S. Treasuries and pushed yields lower. After the Iran conflict erupted, however, inflation concerns dominated and pushed yields higher — especially at the short end of the curve. Market pricing shifted materially: markets stopped pricing more than two rate cuts and began discussing the possibility of one or even two rate hikes.