Iran is still making harsh statements, but what truly keeps Wall Street awake is not the missiles, but a piece of paper — U.S. Treasury bonds. Over the past 27 days, it has skyrocketed.
Everyone is still watching whether there will be a conflict in the Strait of Hormuz, but the real 'game changer' has quietly switched tracks.
In less than a month, the yield on U.S. 10-year Treasury bonds soared by 50 basis points, reaching 4.42%. What does this mean? Simply put, the 'pricing anchor' for global assets is skyrocketing. Previously, the market was happily discussing 'when will the Fed cut rates'; now the mood has changed — people are starting to talk about rate hikes.
This is the real 'elephant in the room.'
To be honest, war has always been a catalyst for inflation. With the recent events in Iran, oil prices and shipping rates are both on the rise, and inflation expectations have directly climbed to 5.2%. However, on the other hand, the U.S. employment data is being revised downward, and the labor market is clearly cooling down.
This puts the Federal Reserve in a tough spot: inflation can't be contained, and the economy can't bear it. If they raise interest rates, the economy might collapse; if they don't, the inflation rebound could be even more troublesome.
In the past, everyone thought that 'geopolitical conflict' was the biggest risk in the market, but now it seems that the bond market is the one that can truly control all assets, the 'big boss.' Whether it's U.S. stocks, gold, or even the cryptocurrency market, they all follow U.S. Treasury yields.
My opinion is that
The key point has arrived. Historical experience tells me that when the 10-year U.S. Treasury yield hits the range of 4.50%-4.70%, the U.S. government is very likely to intervene. It's not the Federal Reserve acting directly, but rather through verbal interventions, adjusting fiscal policies, or even diplomatic means to 'save the market indirectly.'
Think about it carefully—Trump recently suddenly hinted that 'the war has been won' and started talking about peace. Is it really because he doesn't want to fight? Or is it because if he doesn't talk, the bond market will take down his own people first? Sometimes, the most effective weapon is not a missile, but interest rates.
For us ordinary players, at this stage, it's best not to go against U.S. Treasury yields. When they rise, almost all risk assets will feel the pinch. Conversely, if they are truly suppressed, that could be an opportunity.
Do you think U.S. Treasury yields will continue to rise? Or is policy intervention coming soon? Let's discuss your judgment in the comments.