The most notable shift in the fixed-income market during the first half of 2026 is the resurgence of an "inflation-on" paradigm, Federated Hermes's Karen Manna says in a note. Historically, geopolitical conflicts have triggered a flight to quality and driven up U.S. Treasurys, thereby pushing yields down, the senior fixed-income portfolio manager says. "However, following the outbreak of the conflict involving Iran, inflation concerns have dominated the market, driving yields higher--particularly at the short end of the curve," she writes. Consequently, market expectations have shifted drastically: Instead of the more than two rate cuts originally priced in, the possibility of one or even two rate increases is now being discussed, she says. (emese.bartha@wsj.com)