US equities opened higher on Friday as soft economic data strengthened expectations that the Federal Reserve may cut interest rates later this year . Investors also remained cautious as geopolitical tensions in the Middle East continued to influence market sentiment and energy prices. Market Rebound After Recent Losses The S& P 500 rose 0.8% in early New York trading, recovering after three consecutive sessions of declines . The Nasdaq 100 also gained 0.8% , supported by technology stocks, although the Magnificent Seven index remained near ...
US Treasury volatility has surged to its highest level in nine months, as the Iran war disrupts rate expectations and revives fears of persistent inflation.
MOVE Index Spikes as Inflation Worries Mount
The ICE BofA MOVE Index — widely known as the bond market’s “fear gauge” — climbed to levels last seen in June.
The jump reflects:
Elevated oil prices
Rising inflation expectations
Reduced confidence in Treasuries as safe-haven assets
Key Point: Bond investors are now pricing in greater uncertainty around inflation and Federal Reserve policy.
Long-Term Yields Climb, Rate-Cut Bets Fade
Yields on 30-year US Treasuries — highly sensitive to inflation and fiscal risks — have climbed to a one-month high.
Meanwhile:
Two-year yields hit their highest since August
One-year US inflation swaps are nearing 3%
Traders have scaled back expectations for Fed rate cuts in 2026
The war has complicated the outlook just as markets were expecting easing.
Trump has renewed calls for rate cuts, adding another layer of policy uncertainty around the Federal Reserve.
Stagflation Risk Returns to the Conversation
Several strategists are warning about stagflation — a mix of slow growth and high inflation.
BlackRock Investment Institute flagged risks of a stagflationary shock, while Loomis, Sayles & Co warned of mounting fiscal pressures.
“Volatility is going to remain elevated,” said Morgan Stanley’s chief fixed-income strategist.
Key Point: Investors are demanding higher compensation for holding bonds amid inflation and fiscal risks.
Global Bond Selloff Spreads
Treasuries have set the tone for global debt markets:
Government bonds in Japan and Australia have fallen
Yields are rising worldwide
Central banks may face pressure to delay easing or even tighten policy
Bloomberg’s Treasury index has nearly erased its gains for the year.
Fiscal Concerns Add Pressure
The conflict may also worsen the US deficit outlook. Prolonged geopolitical tension could increase:
Government spending
Borrowing needs
Pressure on long-term yields
The United States Congressional Budget Office already projects rising deficits over the next decade, and additional fiscal strain could amplify volatility.
Bottom Line
The Iran war has triggered a sharp repricing in bond markets.
The surge in Treasury volatility signals rising stagflation fears, fading rate-cut expectations, and growing concerns about US fiscal sustainability.
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