Report: The "inflation heating up" pattern is seen as the most significant change in the fixed income market in the first half of the year.

Karen Manna of Federated Hermes stated in a report that the most significant change in the fixed income market in the first half of 2026 is the reappearance of the "inflationary heat-up" pattern. This senior fixed income fund manager explained that historically, geopolitical conflicts often trigger a shift towards high-quality assets and push up U.S. Treasury bonds, thereby lowering yields. She wrote, "However, after the conflict involving Iran broke out, inflation concerns dominated the market, pushing up yields especially at the short end of the yield curve." She said that as a result, the market's expectations have undergone a dramatic shift: where the market previously reflected expectations of more than two rate cuts, it is now discussing the possibility of one or even two rate hikes.