Middle East Conflict Sends Oil Up, Bonds Down -- WSJ

By Heard on the Street Staff

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What Happened in Markets Today

Oil climbed again. After rising above the $90 a barrel threshold on Monday, Brent crude futures surged above $94 on Tuesday as Middle East tensions again flared. The U.S. said it launched strikes Tuesday against Iranian targets, responding to attacks on commercial ships and U.S. personnel in the region.

Bond yields surged. Renewed Middle East fighting and higher oil prices raise the prospect for accelerating inflation, coupled with higher benchmark interest rates designed to tame it. Those factors pushed yields on 10-year government bonds from Japan to levels not seen since 1996, while German and U.K. 10-year yields also reached multiyear highs. Ten-year U.S. Treasury yields rose to their highest level since January 2025.

Stocks fell. All that uncertainty weighed on stocks, leaving major indexes in the red. The S&P 500 fell 0.7%, the Nasdaq lost 1% and the Dow Jones Industrial Average fell 419 points, or 0.8% for the day.

The U.S. jobs picture looked mixed. New Labor Department figures showed the number of open positions rose slightly in July compared with June. Yet hiring was less robust in July, suggesting employers aren't as eager to fill open positions.

Markets at a Glance

One Big Story

Rising oil prices are pushing global bond markets to the brink.

Crude prices, which recently surged again to above $90 a barrel, are putting upward pressure on inflation. And there is growing evidence that those pressures are seeping into broader rises in the price of all kinds of other goods.

That is putting pressure on prices of government bonds in Europe, Japan and the U.S., where yields are at multiyear highs.

Countries can help reverse this course by raising benchmark interest rates and reining in budget deficits. But the underlying pressures will only be removed with the resolution of the Persian Gulf conflict that is driving oil prices higher.

What's Coming Up

The Fed's beige book-a regular qualitative assessment of the U.S. economy-is due out Wednesday afternoon.

New factory orders data for July are due in the morning.

AI chip player Broadcom, retail giant Costco Wholesale and corporate-software provider Snowflake report results after the bell Wednesday.

Be prepared for the trading day ahead-sign up for Markets A.M.

About Us

Markets P.M. catches you up on the day's most important markets moves, delivered after the closing bell. This email was written by Asa Fitch, a writer for Heard on the Street, The Wall Street Journal's home for financial analysis and commentary. To send us your feedback, reply to this email. Got a tip for us? Here's how to submit.

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September 01, 2026 16:05 ET (20:05 GMT)