Market is shrouded in worries about war, and the panic index for US debt has risen to a nine-month high.

The volatility of US Treasury bonds has risen to the highest level in nine months, as the conflict in Iran intensifies concerns about inflation and disrupts traders' expectations for the Federal Reserve's policy path. The ICE BofA Merrill Lynch Option-Adjusted Spread Index, commonly referred to as the "fear gauge" of the bond market, climbed to its highest level since June, as high oil prices exacerbated inflation worries, undermining the real yield of US bonds and dampening their safe-haven appeal. Both US President Donald Trump and Iran have made strong statements about the war, increasing uncertainty about the duration of the conflict. The yield on the 30-year US bond, which is sensitive to inflation and government spending dynamics, has risen to a one-month high, with traders reducing their bets on a Fed rate cut in 2026. "As bond investors, we must start considering the possibility of stagflation, which always brings significant uncertainty," said Jack McIntyre, portfolio manager at Brandywine Global Investment Management.