A month in and the Iran war has a new protagonist. Oil grabbed the headlines but it’s the bond market quietly pulling the strings beneath the surface. Trump has given Iran until April 6 to reopen the Strait of Hormuz or face strikes on energy infrastructure – a deadline that now runs parallel to the bond market’s own countdown. With the 10Y yield approaching levels that have historically forced his hand, the next ten days may matter more than the last thirty.
Macro: No Easter Break for the Bond Market
The week’s price action told a familiar and increasingly uncomfortable story – but this week, something shifted beneath the surface. The S&P 500 has hit its lowest level since September. Brent settled firmly above USD100. Treasury yields pushed higher as the bond market continues to price an inflation problem that won’t go away quietly. The pattern keeps repeating because nothing underlying has changed. But the market’s center of gravity is moving. Oil was the story for the first three weeks of this war. The bond market is becoming the story now.
Since the onset of war, the US 10Y yield has risen from 3.92% to 4.46%. To appreciate how dramatic that is, recall that just months ago the base case had the Fed cutting rates through 2026. Today, rate hike probabilities are back on the table – the direction of travel has completely reversed, and fast.
Trump, characteristically, appears to be fighting on two fronts. One eye on the Strait, the other on the bond market. He has already extended the Strait deadline to April 6 – and with the 10Y creeping toward the 4.50–4.70% zone where he has historically been forced to act, the next ten days may prove pivotal on both fronts simultaneously. The bond market has moved him before. It is approaching those levels again.
The geopolitical noise, meanwhile, remained relentless but hollow. Ceasefire signals from Washington contradicted themselves within hours. Tehran denied any substantive talks had taken place. Iran is now reportedly drafting legislation to monetize Strait passage rather than reopen it – turning the chokepoint into a toll road. Inflation expectations have surged to their highest since early 2023, and the Fed is caught between an economy that cannot handle higher rates and an inflation problem that will not allow cuts.
The insight here is simple but important: the Iran war does not need to escalate further to cause damage. It simply needs to continue. Every additional week of elevated energy prices is another week of inflation staying sticky, another week of the Fed staying frozen, and another week of the bond market tightening financial conditions without anyone pulling a trigger. The slow grind is the risk – not the next headline.
Crypto: Shaken, Not Stirred
BTC is opening Friday’s session trading sub USD 67,000, down roughly 5% on the week. However, a month of war, higher energy costs, equities at September lows, Treasuries selling off and the fact that BTC is consolidating rather than breaking down is notable, even if it does not feel like it in the moment.
Flows, however, have been less constructive than last week. Spot BTC ETFs have seen USD 70.8 million in net outflows so far this week – a meaningful reversal from the prior week’s inflows. ETH ETFs are worse, registering seven consecutive days of outflows with total net flows of USD 157.9 million this week.
One dynamic worth watching closely is miner economics. The average all-in cost to mine 1 BTC currently sits around USD 80,000 and is meaningfully above spot. At current price levels, margins are compressed, and the incentive to hold freshly mined coins weakens. MARA Holdings made that calculus explicit this week, selling 15,133 BTC for USD 1.1 billion to fund a debt buyback. When miners become sellers at scale, it adds a structural headwind that the market needs sustained demand to absorb. With that backdrop, it is difficult to make a near-term bullish case for price. BTC is now testing the USD 65,000–66,000 zone – a level that matters. If sustained demand does not show up here, the path lower becomes easier to justify than the path higher.
Looking Ahead: The Long Game
If the Strait deadline passes without resolution, the oil price stops being the binding constraint – the bond market takes over. If the 10Y continues its march higher, the sequence is predictable: yields rise, financial conditions tighten, policy responds. The question is how disorderly the move gets before intervention arrives.
Wednesday’s ISM and Friday’s NFP – both landing into a Good Friday close (and lower liquidity environment) – will be the first real test. Given the pattern of aggressive payroll revisions in recent years, even a headline beat may not be the reassurance it appears.
For BTC, cleaner positioning means any credible de-escalation could be violent to the upside. But the more durable trade is longer than any headline – built on the slow accumulation of a narrative where BTC functions as something the traditional financial system simply cannot replicate.
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