Mounting geopolitical tensions in the Middle East show no signs of de-escalation, triggering a fresh wave of market volatility. As oil prices surge, investors are not flocking to U.S. Treasuries but instead accelerating their exit from government bonds.
Treasury’s Safe-Haven Status Under Pressure
Historically seen as a refuge during crises, U.S. debt is now being sold off amid rising regional hostilities. The reason? This conflict is fueling inflation and widening fiscal deficit concerns, outweighing traditional growth-risk narratives.
According to Barclays strategists, markets are now factoring in higher term premiums and reassessing the Fed’s rate trajectory as fiscal risks take center stage.
Yields Climb Across the Curve
- 2-year yield jumps 5.9 bps to 3.611%
- 10-year yield rises 5.7 bps to 4.187%
- Focus shifts from soft economic data to conflict duration and global spillovers
Data from Tradeweb highlights a broader shift in investor behavior, with capital moving away from long-duration assets. With oil-driven inflation eroding real returns, the bond market’s pricing logic is undergoing a structural rethink.