Bonds and Stocks Fell Together—A Sign Markets Fear Inflation, Not Recession

Government bonds sold off alongside stocks on July 8, breaking the typical pattern where investors flee equities for bond safety. Rising yields suggest markets view the Iran-US oil shock as inflationary rather than deflationary. If crude stays above $75 per barrel, higher headline inflation could arrive within one to two quarters, forcing central banks to rethink rate cuts already priced into markets.