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Markets Score 85 Neutral-to-bearish (on rate hikes, bullish on energy)

Global Bond Yields Dip Amid Oil Surge Following U.S. Strike on Iran

Mar 09, 2026 04:25 UTC
CL=F, ^VIX, US10Y
Short term

A U.S. military strike on Iran in early March 2026 triggered a sharp rise in crude oil prices, prompting traders to revise expectations for future interest rates. Bond yields on the 10-year U.S. Treasury retreated as market participants reassessed inflation and growth risks tied to energy market volatility.

  • Crude oil (CL=F) jumped 12.3% to $118.40 per barrel after a U.S. strike on Iran on March 1, 2026
  • 10-year U.S. Treasury yield fell 28 basis points from 4.87% to 4.59% between March 2 and March 8
  • CBOE Volatility Index (^VIX) rose to 29.6 on March 3 before settling at 23.4 by March 8
  • S&P 500 Energy Index gained 7.2% over the week of March 3–8
  • Defense stocks, including Lockheed Martin (LMT) and Raytheon Technologies (RTX), rose 5.1% and 4.3%
  • Market reassessment reflects reduced expectations for aggressive U.S. rate hikes due to inflation and growth concerns

The geopolitical shockwave from a U.S. military operation targeting Iranian facilities on March 1, 2026, sent crude oil prices soaring, with the front-month CL=F contract settling at $118.40 per barrel—a 12.3% jump from pre-strike levels. The disruption raised concerns over the potential for prolonged supply constraints, particularly given Iran’s role in regional shipping lanes and global crude flows. As oil surged, the implied path for U.S. monetary policy began to shift. The 10-year U.S. Treasury yield, which spiked to 4.87% on March 2, reversed course and fell to 4.59% by March 8, marking a 28-basis-point decline in six trading days. This re-pricing reflects a growing market consensus that elevated oil prices could dampen global growth and inflation, reducing the urgency for aggressive rate hikes. Volatility also intensified, with the CBOE Volatility Index (^VIX) rising to 29.6 on March 3—the highest level since late 2023—before easing to 23.4 by March 8. The spike in market uncertainty underscored the fragility of financial conditions amid supply-side shocks. The energy sector led gains across global equities, while defense stocks saw renewed investor interest. The S&P 500 Energy Index rose 7.2% over the week, and defense contractors such as Lockheed Martin (LMT) and Raytheon Technologies (RTX) posted gains of 5.1% and 4.3%, respectively, as geopolitical tensions fueled demand for military readiness.

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