The Globe and Mail reports in its Saturday edition that bonds have endured a rough few weeks since the United States and Israel attacked Iran. The Globe's David Berman writes that is giving central bankers plenty to think about as they weigh uneven economic activity and a vulnerable job market against the threat of rising inflation. The Federal Reserve and the Bank of Canada held their respective interest rates unchanged last week, but their assurances did nothing to calm financial markets that are growing wary of another round of inflation. The bond market can sniff trouble. The yield on the 10-year U.S. Treasury bond rose to 4.39 per cent Friday, marking its highest level of the year. Before the war began, the yield was below 4 per cent. Some observers expect that weak economic readings in the U.S. will keep the central bank on track for cutting rates, which could help the bond market. "We continue to expect two rate cuts from the Federal Reserve during the second half of the year, which will bring rates down close to a neutral level," Andrew Grantham, an economist at CIBC Capital Markets, said in a note. Mr. Grantham cautioned that this forecast rests on the assumption that the conflict in the Middle East ends soon.