US Treasury yields climbed sharply on Monday, marking a significant break from recent market norms as global bond markets experienced a severe selloff.
The move challenges the long-held perception of Treasuries as a reliable 'risk-free' asset during times of geopolitical stress.
Instead of flowing into US debt for safety, investors are selling bonds, driving yields higher amid renewed inflation concerns and uncertainty surrounding the conflict.
The sudden escalation in hostilities in the Gulf region has disrupted traditional market mechanics.
Capital that typically shifts toward stable government debt during crises is instead being pulled out, prompting a repricing of risk across fixed-income markets.
This inversion of the usual flight-to-safety dynamic suggests that geopolitical risks are now being viewed through the lens of inflationary pressure and fiscal strain rather than pure economic contraction.