Bonds & Stocks
Stocks around the world traded well off their worst levels on Friday as the latest flare-up in Middle East tensions seemed contained — with a flight to bonds, gold and the dollar waning. Oil fell. Equities saw mild moves in US hours on reports that an Israel strike on Iran was limited in scale, causing little damage. Treasury 10-year yields dropped only three basis points to 4.60% — almost erasing an earlier plunge of 14 basis points. The greenback was little changed.
Economy
Economists once again upgraded their forecasts for US growth, spending and employment, but also see interest rates remaining higher for longer as above-target inflation persists. The upper boundary of the Federal Reserve’s target range for its benchmark interest rate, currently 5.5%, will fall only to 4% by the end of 2025, according to the latest Bloomberg monthly survey.
World
Israel reportedly struck back at Iran on Friday morning, hitting a military site in a drone operation that was limited in scale and seemed to cause little damage. Iranian state media confirmed an attack had taken place in the city of Isfahan and said it failed. The country’s officials — who were bracing for Israel to respond to Saturday’s unprecedented drone and missile assault by the Islamic Republic — signaled they weren’t inclined to launch a counterstrike.