- US Treasuries rose, leading European bonds higher, as investors sought safe havens in the Middle East.
- The 10-Yr Treasury yield fell 10 basis points after Israel increased air strikes on Hamas targets in Gaza and at least two missiles were fired from Lebanon at Israel. Treasuries held their gains despite Federal Reserve Governor Michelle Bowman's comments that higher interest rates may be needed to combat inflation. Germany's 10-Yr yield has fallen by six basis points.
- Investors are concerned that an escalation of the conflict will have repercussions throughout the Middle East, jeopardising Israel's fragile rapprochement with its Arab neighbours and raising the possibility that hostilities will escalate into a larger regional war with implications for crude oil supplies.
- Meanwhile, a rally in European stocks came to a halt as disappointing corporate news dampened investors' optimism about the outlook for interest rates and Chinese economic stimulus.
- After posting its biggest gain of the year on Tuesday, the STOXX Europe 600 index fluctuated.
- Missiles have been fired from Lebanon towards Israel - State-run NNA.
