Investment Insights -
Trump's &#34;tough talk&#34; leads to rising bond yields across major economies!
On Friday (March 27), during the European session, bond yields in the U.S., Germany, the UK, and Japan all rose, with the U.S. 2-year Treasury yield climbing to 4.017%, the highest since June 2025; the 10-year U.S. Treasury yield rose to 4.45%, reaching an eight-month high, while Japan's 10-year government bond yield hit its highest level since 1999. The German 10-year government bond yield increased to 3.121%. The reason for this is that although Trump announced an extension of the deadline for negotiations with Iran by 10 days to April 6, he is also considering deploying up to 10,000 ground troops to the Middle East.
It is noteworthy that the current U.S. military action objectives, withdrawal timeline, and potential ground operations are all clear. Therefore, the development of the situation depends more on Iran's attitude. On Friday (March 27), the Iranian military warned that hotels housing U.S. soldiers in the region would become targets for attacks. The Iranian Islamic Revolutionary Guard Corps stated that U.S. forces are attempting to use civilian areas as cover in some regions, and Iran will continue to take action against U.S. related targets at any location. The statement advised residents in the relevant areas to evacuate as soon as possible from U.S. military bases and surrounding areas to reduce potential security risks.
The author reminds that ongoing instability in the Middle East will mean that oil prices will remain high for a longer time, and in fact, due to damage to energy infrastructure in the Middle East, the market currently expects that global oil and gas supplies may take six months to fully recover after the conflict ends.
J.P. Morgan analysts predict that due to the disruption of oil transportation in the Strait of Hormuz caused by the U.S.-Iran war, the global oil system is shifting from supply shocks to inventory depletion issues. J.P. Morgan expects the oil crisis to sequentially impact regions worldwide, starting from Asia, moving through Africa, to Europe, and ultimately affecting the U.S., with most regions facing pressure concentrated in April.
Rising oil prices will undoubtedly drive global inflation, which will weaken the likelihood of the Federal Reserve cutting interest rates while pushing U.S. Treasury yields higher. Higher U.S. Treasury yields will put pressure on overvalued U.S. stocks, making it more likely that more U.S. Treasuries will be sold to fill positions. Once this cycle begins, the result will be a resonant decline in both U.S. stocks and Treasuries.
Based on last year's equivalent tariff event experience, a 10-year U.S. Treasury yield at the 4.5-4.6% level will trigger deeper market sell-offs. Therefore, the conclusion may be that the more aggressive the U.S. is in the Middle East without deploying ground troops, the easier it will be for oil prices and U.S. Treasury yields to rise, forming a vicious cycle. However, if ground troops are deployed and the conflict drags into a stalemate similar to that in Ukraine, it will mean a greater impact on the credibility of the U.S. dollar.
10-year U.S. Treasury yield:
<img src="https://imageproxy.pbkrs.com/https://resource.mistorebox.com/insights/cms_uploads/uedimg/20260327/17746063631154.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://resource.mistorebox.com/insights/cms_uploads/uedimg/20260327/17746063631154.png"/>
Image source: tradingview
In simple terms, as the yield on the 10-year U.S. Treasury approaches 4.6%, Trump may have to &#34;TACO&#34; once again. Otherwise, the global market will face systemic risks, at which point investors will sell everything and hold cash (U.S. dollars).
More importantly, the military objectives of the United States and Israel are not entirely aligned. Currently, Israel is ramping up its offensive based on concerns that the U.S. may withdraw from the Middle East crisis in the short term, which seems to complicate U.S.-Iran negotiations.
In summary, the author believes that the current market's main theme is undoubtedly the progress of the U.S.-Iran war, and investors should focus on whether the yield on the 10-year U.S. Treasury will reach the 4.5-4.6% level and whether the VIX fear index will further break through the 40 level. It is expected that volatility will further increase, and investors should remain cautious. If there is a lack of progress, the market trading logic may continue to reflect stagflation trading

NDAQ

Bond yields in the US, Germany, the UK, and Japan all rose, mainly due to Trump extending the negotiation deadline with Iran and considering increasing ground troops. The yield on the US 2-year Treasury rose to 4.017%, while the 10-year Treasury yield climbed to 4.45%. The turmoil in the Middle East could lead to high oil prices, which in turn may push up global inflation, weakening the possibility of interest rate cuts by the Federal Reserve, and affecting the US stock and bond markets. JP Morgan analysts predict that the oil price crisis will start in Asia and ripple out globally, leading to a simultaneous decline in US stocks and bonds

- U.S., German, British, and Japanese bond yields rose sharply, with the U.S. two-year Treasury yield reaching a new high of 4.017% and the ten-year Treasury yield climbing to 4.45%.  
- The rising yields are attributed to heightened geopolitical tensions following Trump's extension of negotiation deadlines regarding Iran and potential military escalations in the Middle East.  
- Analysts warn that ongoing volatility could sustain high oil prices and pressure financial markets, with significant implications for inflation and U.S. interest rates, creating a risk of a systemic market sell-off if conditions worsen.

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U.S., German, British, and Japanese bond yields all rose, is Trump likely to "TACO" again?