bitcoin and global stock markets have stabilized after a sell-off earlier in the week and a surge in the price of oil that was triggered by the outbreak of the military conflict between the United States, Israel and Iran. Bond markets are signaling caution, however, as rising yields signal renewed concerns about inflation and declining bets on Federal Reserve rate cuts.
BTC, the leading cryptocurrency by market value, traded above $70,000 on Friday, up almost 10% on the week. Prices briefly rose to nearly $74,000 on Wednesday after falling to around $65,000 over the weekend as geopolitical tensions rocked markets.
The rally has been reflected in stock futures. Contracts linked to the S&P 500 fell to a multi-week low of 6,718 points on Tuesday before recovering to around 6,840 at the time of writing.
The initial risk-off move came as oil prices rose following reports that Iran had blocked oil tankers transiting the Strait of Hormuz, a critical point for global crude supplies. Markets stabilized after the United States moved quickly to calm fears, promising naval escorts and political risk insurance for oil and gas tankers passing through the strait.
Still, the bond market remains restless.
The yield on the 10-year US Treasury bond has risen for four consecutive days, rising from 3.93% to 4.15%. Bond prices move inversely to yields. Meanwhile, the two-year yield, which is more sensitive to interest rate expectations, has jumped from 3.37% to almost 3.60%.
Rising yields suggest traders are reassessing the outlook for monetary policy as a conflict-driven rise in energy prices threatens to reignite inflationary pressures.
According to CME Fed Fund Futures, investors now see a less than 50% chance that the Fed will make two 25 basis point rate cuts this year, down from nearly 80% before the conflict began.
“The rates market is revealing the tension in this rally,” Bryan Tan, a trader at major digital asset market maker Wintermute, said in an email, highlighting the rise in yields.
“The conflict between a resilient economy (ISM Services at 56.1, ADP at +63,000 vs. +50,000 expected) and an inflationary energy shock is historically the type of setup that keeps the Fed frozen the longest. Warsh’s nomination officially coming to the Senate this week adds another layer of aggressive uncertainty,” Tan added.
Some observers note that the inflationary impact of oil shocks generally unfolds gradually across the global economy, suggesting that yields could remain elevated in the coming weeks and potentially limit the rise of risk assets such as stocks and cryptocurrencies.
“After major geopolitical shocks, oil prices typically rise gradually over weeks. The average pattern shows that oil typically rises 20% to 30% within 60 days of the shock,” explained analyst Jack Prandelli at
Recent strong economic data in the United States has also contributed to rising yields and reducing rate cut expectations. Data released on Tuesday showed that economic activity in the US services sector continued to expand in February, with the ISM index rising to 56.1. ADP’s private payrolls report showed the creation of 63,000 jobs in February, the strongest reading since July 2025.
Attention now turns to Friday’s nonfarm payrolls report and wage growth numbers. A higher-than-expected figure could further weaken expectations of Fed rate cuts and inject new volatility into financial markets.
