Markets are reacting to the Middle East situation with more calm than expected.

The ceasefire extension is seen as “moderately bullish” for bonds, but the real signal is how muted the reaction has been. Investors seem to be pricing in prolonged uncertainty rather than short-term relief. We’re already seeing it in yields. The U.S. 2-year dropped to 3.764% (-1.3 bps) and the 10-year to 4.283% (-0.8 bps), small moves, but clearly leaning cautious. At the same time, rate expectations remain uncertain. Markets are pricing only \~9 bps of cuts for 2026, while some forecasts point closer to 50 bps. That gap says a lot. Globally, growth is expected to slow as well. Asia-Pacific is projected to ease from 4.3% in 2025 to 3.8% in 2026, despite short-term support from the AI boom. Curious how others are viewing this shift.