The Globe and Mail reports in its Tuesday edition that bond investors have adopted a defensive stance due to the Iran war, with many buying short-term U.S. Treasuries ahead of the Federal Reserve's policy decision. A Reuters dispatch to The Globe reports that the Federal Open Market Committee is expected to keep interest rates between 3.5 per cent and 3.75 per cent as they evaluate the war's impact on their goals of price stability and maximum employment. Despite the caution, many investors believe the war will be short-lived, potentially limiting the effect of rising oil prices on inflation. Stable consumer prices may allow the Fed to cut rates later this year, possibly sparking a rally in U.S. Treasuries and the broader debt market. Geopolitical tensions, persistent inflation and a weakening labour market have clouded market views on the Fed's policy direction, prompting investors to avoid longer-term bonds until more clarity emerges. "Investors are more cautiously positioned and have avoided riskier parts of the bond market," says Twenty-Four Asset Management's Danny Zaid. In March, two-year yields rose 31 basis points, driven by concerns that central banks cannot cut rates due to inflation from rising oil prices.