Report: Prolonged Middle East conflict may prompt investors to abandon expectations of a rate cut by the Federal Reserve.

SEB's Jussi Hiljanen stated in a report that the prolonged conflicts in the Middle East, along with higher and more sticky energy prices and more sustained disruptions to energy supplies in the Gulf region, could push Brent crude oil prices towards or above $100 per barrel, prompting the market to lower expectations for a rate cut by the Federal Reserve. The chief interest rate strategist said, "The market will continue to weaken its expectations for a Fed rate cut, and may even completely eliminate this expectation, which will significantly increase short-term bond yields." He noted that while the United States has lower vulnerability in terms of energy compared to Europe, rising global energy prices will tighten financial conditions and increase inflation risk premiums.