Stocks rise as Treasury market loses value during Iran war
Updated
Updated · Barron's · May 7
Stocks rise as Treasury market loses value during Iran war
13 articles · Updated · Barron's · May 7
The Dow traded above 50,000 on Thursday, the S&P 500 is up 6.5% since Feb. 27, and the Bloomberg Treasury Index was down 1.5% through Wednesday.
Deutsche Bank's Henry Allen said equities are treating the conflict as temporary, while bonds price a longer war as surging oil raises inflation expectations and pushes yields higher.
The S&P 500's 10-day correlation with Brent crude was minus 0.77, while 10-year yields showed a 0.92 correlation; strong first-quarter earnings, up 27.1%, also supported shares.
Stocks hit record highs while bonds sink. Who is right about the war's economic fallout?
Can booming tech earnings shield the economy from a historic oil shock and spiraling U.S. debt?
As U.S. debt hits $39 trillion, is the world's faith in American bonds finally breaking?
Iran Conflict Drives Historic Oil Supply Shock, Inflation Surge, and Market Volatility in Spring 2026
Overview
In mid-April 2026, the U.S. stock market rebounded strongly as a two-week ceasefire between the U.S. and Iran sparked investor optimism, erasing earlier losses caused by the Iran conflict outbreak. This recovery triggered fear of missing out, driving more investors back into equities. Despite the rally, oil prices remained elevated due to ongoing geopolitical risks, fueling inflation concerns that pushed Treasury yields higher and increased market volatility. The Federal Reserve's prior rate hikes and subsequent cuts helped support the equity bounce, but persistent inflation and economic uncertainty led investors to shift toward defensive sectors and inflation-protected assets. Overall, markets showed resilience amid complex risks, with cautious optimism tempered by ongoing geopolitical and inflation challenges.