The United States and Israel have launched a new round of military operations in the Middle East, but the market's reaction has overturned the textbook logic of safe-haven assets.
On Tuesday, the dollar strengthened, gold plummeted, bond yields rose across the board, and both the yen and the Swiss franc fell—traditional safe-haven assets collectively &#34;lost ground.&#34; The only asset acting as a safe haven was crude oil. Brent crude oil surged over 8% at one point during the day, becoming the most prominent winner in the market and thereby reshaping the rise and fall logic of almost all assets that day.
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This combination is extremely rare. According to the Wall Street Journal, since 1983, there have only been 16 instances where Brent crude oil rose more than 7% in a single day while gold fell and bond yields rose. On Tuesday morning, the S&amp;P 500 index fell over 2%—this level of decline had never occurred in those 16 instances.
Analysts pointed out that for investors holding gold, U.S. Treasuries, and consumer staples stocks to hedge against risks, the experience of that day was far more uncomfortable than the price numbers suggested. Market logic has shifted from &#34;stocks to bonds, weak to strong&#34; to &#34;oil-exporting countries to oil-winning countries.&#34;
<h2>Bonds fell first, followed by gold, yen, and Swiss franc &#34;subsequently falling&#34;</h2>
In times of severe global market turbulence, government bonds are usually the first safe haven for funds. However, on Tuesday, U.S. Treasury yields rose instead of falling, and even the yields on Swiss government bonds, known for their safety, also increased.
The reason is that the sharp rise in oil prices almost immediately translated into inflation expectations, cooling market bets on Federal Reserve rate cuts, which in turn pushed up bond yields. The safe-haven function of the bond market was directly offset by this mechanism.
This logical chain is clear and direct: Rising oil prices → Rising inflation expectations → Shrinking rate cut expectations → Rising bond yields → Falling bond market. Tuesday's market movements were a complete demonstration of this chain.
Gold should have benefited from inflation concerns, but on Tuesday, gold prices fell by about 4%, and even when the stock market rebounded strongly in the afternoon, the decline in gold prices remained significant.
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Analysts noted that gold faced a &#34;double whammy&#34;: First, gold is priced in dollars, and the strengthening dollar directly suppressed gold prices; Second, prior to the outbreak of the conflict in the Middle East, gold had already risen 21%, reaching a high level, making it the most convenient asset for traders to reduce leverage when needed.
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This phenomenon reveals a market reality: when asset prices rise too much and positions become too crowded, any external shock can lead to them being sold off first, rather than acting as a safe haven.
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It is worth noting that although the dollar index rose about 1% on Tuesday, superficially aligning with the usual pattern of funds flowing into the dollar during crises, a closer look reveals that the driving logic behind this round of dollar appreciation is entirely different from before
Typically, in a market dominated by risk aversion, the Swiss franc and the Japanese yen strengthen simultaneously, often even outperforming the US dollar. However, on Tuesday, the Swiss franc fell 0.5% against the US dollar, and the yen dropped 0.3%. This indicates that funds are not seeking the &#34;safest currencies,&#34; but are concentrating on &#34;oil beneficiary countries.&#34;
The United States is the world's largest oil producer and a net exporter of oil. If Iran disrupts tanker passage through the Strait of Hormuz or attacks oil and gas infrastructure on the Arabian Peninsula, the US will be one of the biggest economic beneficiaries.
Norway is similar—on that day, the Norwegian krone strengthened significantly against the US dollar. In contrast, most European countries and Japan are net oil importers, putting pressure on their currencies.
<h2>Oil Prices Dominate Everything, but Uncertainties Remain</h2>
When oil prices rise, it negatively impacts the stock market; when oil prices fall, it benefits the stock market. Until the outcome of the war is clear, every fluctuation in crude oil will directly determine the market's direction. On Tuesday, both rises and falls occurred within the same trading day.
Analysts pointed out that all market fluctuations on Tuesday were based on one premise: the war will continue, and Iran still has the capability to significantly disrupt oil transportation or production.
However, this premise was later challenged—Trump stated, the US may begin to provide escort for tankers passing through the Strait of Hormuz. This statement complicated the market's judgment on the situation's direction.
According to an article mentioned by Wall Street Insight, the turning point in the market on Tuesday occurred in the afternoon when Trump posted on a social media platform:
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Effective immediately, I have ordered the US International Development Finance Corporation (DFC) to provide political risk insurance and financial security at reasonable prices for all maritime trade passing through the Gulf region, especially energy transportation. If necessary, the US Navy will begin escorting tankers through the Strait of Hormuz as soon as possible. In any case, the US will ensure the free flow of energy to the world.
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This statement caused a rapid reversal in market sentiment, with oil prices retreating from their highs and the stock market rebounding significantly from its intraday lows. Adam Turnquist of LPL Financial stated that the latest developments help alleviate concerns about significant disruptions to global supply, ease inflationary pressures, and calm the surge in government bond yields

On Tuesday, the market witnessed a rare market reaction: traditional safe-haven assets collectively faltered—U.S. Treasury yields rose, gold plummeted by about 4%, and both the yen and Swiss franc fell, with only oil soaring over 8% as the sole "safe haven." The logic chain is: rising oil prices → warming inflation expectations → shrinking interest rate cut expectations → falling bond market. The strengthening of the dollar is due to benefiting from the logic of oil-producing countries, rather than safe-haven demand

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"Rare" market reaction: Bonds fell first, followed by gold, yen, and Swiss franc "subsequently collapsing," leaving only crude oil as a "safe-haven asset."