Bond Selloff With Stocks Signals Inflation Fear, Not Safety Bid

Government bonds fell on July 8 as equities sold off—a reversal of the usual pattern where investors flee stocks for bond safety. Yields rose instead, suggesting markets see the Iran-US oil shock as inflationary rather than deflationary. This stagflationary setup complicates central bank policy. Rate cuts priced in before this week may need repricing if crude stays above $75 Brent, feeding headline inflation within one to two quarters.