Federated Hermes Identifies Inflation Expectations Returning as Most Significant Fixed Income Market Change in H1 2026

According to Jin10, on July 3, Federated Hermes senior fixed income portfolio manager Karen Manna identified inflation expectations returning as the most significant change in the fixed income market during the first half of 2026. Following the Iran conflict, inflation concerns dominated the market and pushed up yields, particularly in the shorter end of the yield curve. This marked a sharp shift in market expectations: instead of pricing in multiple rate cuts as previously anticipated, markets are now discussing the possibility of one or even two rate hikes.
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