Treasuries Climb as Powell Eases Fed-Hike Jitters: Markets Wrap
(Bloomberg) — Treasuries bounced after a slide fueled by concerns over the economic fallout of the war in Iran, with traders resuming bets on a rate cut in 2026 as Federal Reserve Chair Jerome Powell eased fears about any imminent impacts of higher energy prices on inflation.
The bond market trimmed what’s expected to be its worst monthly selloff since 2024 as Powell said longer-term inflation expectations appear to be in check, with traders erasing wagers on a rate hike. The S&P 500 fell 0.4% as a rout in chipmakers offset gains in most major groups. US oil topped $100.
Inflation expectations seem to be “well anchored beyond the short term,” Powell said Monday during an event at Harvard University. He added that officials may need to respond to the impact from the conflict, but that it’s not the case yet.
“Fed chair Powell’s calm tone along with overdue market focus on the growth risks from higher-for-longer oil are helping to fuel a turn in rates pricing,” said Krishna Guha at Evercore. “The probability of one or more cuts is much higher than the probability of a hike.”
The war in the Middle East has upended global markets and triggered concern about a simultaneous spike in inflation and slowdown in economic growth. The conflict has severed a crucial route for energy supplies, boosting oil prices and driving stocks toward their worst month since 2022.
The White House threatened further escalation of attacks on Iran, including critical civilian energy infrastructure, as the fifth week of war shows little sign of a letup.
President Donald Trump earlier on Monday posted on social media that if Tehran doesn’t re-open the Strait of Hormuz, “we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating” electricity plants, oil facilities and “possibly” desalination infrastructure.
History shows most geopolitical shocks tend to have a relatively short-lived impact on the market, but without clear evidence of an endgame for the war, stocks will find it difficult to see past the current volatility, according to Chris Larkin at E*Trade from Morgan Stanley.
“The market continues to be headline-driven as the Trump Administration has delivered a variety of messages surrounding de-escalation and re-escalation of the war in Iran,” said Chris Senyek at Wolfe Research. “As such, we maintain our defensively positioned posture.”
There’s growing evidence that the selling that recently hit equities “is getting closer to its ending stages,” said Michael Wilson at Morgan Stanley, who cited the example of previous “growth scares” that were not accompanied by a recession or a rate hike.
“The equity market is less complacent on growth risks than consensus believes,” he noted.
After investors reduced exposure to US stocks last week, the distribution of near-term outcomes has improved, Goldman Sachs Group Inc. strategists said. The first-quarter earnings season in mid-April will be key for providing clarity on the outlook and the impact of the Middle East conflict, they added.
The team led by Ben Snider expects S&P 500 earnings to grow at a solid 12% this year, barring a severely prolonged disruption.
Corporate Highlights:
Morgan Stanley’s E*Trade unit is in talks with SpaceX to lead the sale of IPO shares to small investors, potentially being favored over rival brokerage platforms from Robinhood Markets Inc. and SoFi Technologies Inc., Reuters reported, citing two people familiar with the matter. Fannie Mae and Freddie Mac pared a months-long slide after Bill Ackman, who has bet heavily on the companies, called the mortgage-finance giants “stupidly cheap.” Sysco Corp. is acquiring Jetro Restaurant Depot LLC, the closely held wholesaler founded by billionaire Nathan “Natie” Kirsh, for $29.1 billion including debt in a deal that will create one of the largest food-service groups in the US. US regulators have approved a high-dose version of Biogen Inc.’s drug for a rare muscle disorder, giving the company a boost as it competes with a gene therapy from Novartis AG. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.4% as of 4 p.m. New York time The Nasdaq 100 fell 0.8% The Dow Jones Industrial Average rose 0.1% Currencies
The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.4% to $1.1459 The British pound fell 0.6% to $1.3185 The Japanese yen rose 0.4% to 159.71 per dollar Cryptocurrencies
Bitcoin was little changed at $66,496.76 Ether rose 1.1% to $2,023.02 Bonds
The yield on 10-year Treasuries declined nine basis points to 4.34% Germany’s 10-year yield declined six basis points to 3.04% Britain’s 10-year yield declined four basis points to 4.93% Commodities
West Texas Intermediate crude rose 4.6% to $104.18 a barrel Spot gold rose 0.5% to $4,516.16 an ounce ©2026 Bloomberg L.P.
