Iran war uncertainty keeps long-term inflation expectations elevated, Macquarie says

October 2, 2026 at 03:00 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Macquarie strategist Thierry Wizman says uncertainty over the Iran war's duration is keeping long-term inflation expectations elevated, beyond the direct impact on energy prices. The conflict has pushed Brent crude above $100 per barrel and driven US Treasury yields to levels not seen since 2002. Wizman notes the situation could shift dramatically after the November 3 US midterm elections.

Key Facts

US 10-year and 30-year Treasury yields have reached levels not seen since 2002, surpassing 2007 highs.
Brent crude oil futures pushed back past $100 per barrel on Thursday.
The Pentagon has reported at least $43.6 billion in US spending on the Iran conflict so far.
President Trump has said he expects the war to wrap up shortly after the US midterm elections on November 3.
Macquarie's Thierry Wizman warns that implied volatilities are pricing in divergent two-way outcomes after November 3.

Inflation Expectations

Macquarie strategist Thierry Wizman argues that the perception of endemic global conflict is keeping long-term inflation expectations elevated. Wizman wrote to clients that uncertainty about when the Iran war will end is a key overlooked source of upward pressure on yields. The shuttering of the Strait of Hormuz and attacks on Gulf energy infrastructure have sent energy prices soaring, depressing bond prices as investors price in higher inflation for longer.

Election Uncertainty

Wizman says the status quo can change dramatically after November 3, when President Trump will have more latitude to choose between peace and war. President Trump has said he expects the war to wrap up shortly after the US midterms, but he is also considering a major renewed bombing campaign after the elections. Implied volatilities are starting to price in divergent two-way outcomes after November 3, when events can shift wildly one way or the other.

War Costs

The Pentagon's latest figures to Congress indicate the US government has spent at least $43.6 billion on the Iran conflict so far. Outside research institutions suggest the actual sum could be far higher, as wars require spending on munitions restocks, fuel, combat pay, and other costs.