Global markets have reacted sharply to escalating tensions in the Middle East, with energy infrastructure attacks pushing oil and gas prices higher and prompting a short-term sell-off in both equities and bonds. However, central banks, including the Bank of England and the Federal Reserve, have held rates steady, signalling a measured and data-driven approach rather than rushing into aggressive tightening. While higher energy costs may lift inflation temporarily, policymakers remain focused on preventing longer-term pressures from becoming embedded. At present, it remains difficult to judge how persistent this shock will be, and markets appear to be undergoing a repricing of expectations rather than signalling a structural downturn. For investors, this suggests caution but not alarm, even as gilt yields rise and equities experience near-term volatility.