Iran is still making tough statements, but what really keeps Wall Street awake at night is not the missiles, but a piece of paper — U.S. Treasury bonds.
In the past 27 days, it has skyrocketed.
Everyone is still watching whether the Strait of Hormuz will escalate into conflict, but the real 'killer weapon' has quietly changed its course.
In less than a month, the yield on the 10-year U.S. Treasury has soared by 50 basis points, reaching 4.42%.
What does it mean? Simply put, the 'pricing anchor' of global assets is soaring crazily. Previously, the market was happily discussing 'when will the Federal Reserve cut interest rates', but now the tone has changed — people are starting to talk about interest rate hikes.
This is the real 'elephant in the room'
To be honest, war has always been a catalyst for inflation. With the turmoil in Iran, oil prices and freight rates are both rising, pushing inflation expectations directly to 5.2%.
But on the other hand, US employment data is being revised down, and the labor market is clearly cooling.
This puts the Federal Reserve on the hot seat: inflation can't be contained, and the economy can't hold up.
Raise interest rates, and the economy might collapse directly; don't raise them, and inflation rebounding is even more troublesome.
In the past, everyone thought 'geopolitical conflict' was the biggest risk in the market, but now it seems that the bond market is the real 'big brother' that can control all assets.
Whether it's US stocks, gold, or even the crypto market, they all follow the movements of US Treasury yields.
My perspective
The key point has arrived.
Historical experience tells me that when the 10-year US Treasury yield hits the range of 4.50%-4.70%, the US government will likely intervene.
It's not that the Federal Reserve is directly intervening, but rather through verbal guidance, adjusting fiscal policy, and even diplomatic means to 'indirectly save the market'.
Think carefully — did Trump suddenly say 'the war is won' and start talking about peace because he really doesn't want to fight?
Or is it because if he doesn't talk, the bond market will take down its own people first?
Sometimes, the most effective weapon is not missiles, but interest rates.
For us ordinary players, at this stage, don't go against US Treasury yields.
When it rises, almost all risk assets will feel the pain. But conversely, if it really gets pushed down, then that's the opportunity.
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Will US Treasuries continue to rise? Or will policy intervention come soon?
Let's discuss your judgment in the comments.
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