(Dow Jones)–The conflict in Israel could eventually impact US monetary policy if it lasts long enough to spur inflation via energy prices, AmeriVet’s Gregory Faranello says. In the short term, the war “lends to a flight to quality sentiment,” lifting the dollar while lowering bond yields, he says. The geopolitical ripple effects “lend to issues around resources, supply chains, and deglobalizing dynamics,” Faranello says. For now, US real rates “are high enough to offer protection against pockets like this,” but it could change if the conflict expands.

Meanwhile, in the CME’s FedWatch tool, odds of a Fed skip in November rise to 86% from 73% Friday.

By: Paulo Trevisani (paulo.trevisani@wsj.com; @ptrevisani)