Bitcoin and equities steady after early-week losses, while bonds remain cautious.

Risk Assets Rebound After Oil-Driven Selloff, but Rising Yields Cloud Fed Outlook

Bitcoin (BTC $67,928.90) and global equity markets have stabilized following an early-week selloff and oil price spike triggered by the military conflict involving the U.S., Israel, and Iran. Bond markets, however, remain cautious, as rising yields signal renewed inflation concerns and reduce expectations for Federal Reserve rate cuts.

BTC, the world’s largest cryptocurrency, traded above $70,000 on Friday, marking a near 10% gain for the week. Prices briefly touched almost $74,000 on Wednesday after dropping to around $65,000 over the weekend amid geopolitical tensions.

Equity futures reflected a similar rebound. S&P 500 contracts slid to a multi-week low of 6,718 points on Tuesday before recovering to roughly 6,840 points by the time of writing.

The initial risk-off move came as oil prices surged after reports that Iran blocked tankers passing through the Strait of Hormuz, a critical chokepoint for global crude supplies. Markets steadied once the U.S. promised naval escorts and political risk insurance for oil and gas shipments.

Bond Market Signals Caution

Despite the recovery in risk assets, bond markets remain uneasy. The 10-year U.S. Treasury yield has risen for four straight days, climbing from 3.93% to 4.15%, while the two-year yield, which is sensitive to interest rate expectations, jumped from 3.37% to nearly 3.60%. Rising yields suggest investors are reassessing monetary policy as energy-driven inflation risks grow.

CME Fed funds futures now assign less than a 50% probability to two 25-basis-point rate cuts this year, down from nearly 80% before the conflict began.

“The rates market reflects tension in this rally,” said Bryan Tan, trader at Wintermute, noting the yield increases. “A resilient U.S. economy—ISM Services at 56.1, ADP +63K vs +50K expected—combined with an inflationary energy shock, is historically the kind of setup that keeps the Fed on hold. The Warsh nomination hitting the Senate adds another layer of hawkish uncertainty.”

Some analysts caution that the inflationary effects of oil shocks typically unfold gradually, suggesting yields could stay elevated in the coming weeks, potentially capping gains in equities and cryptocurrencies.

“After major geopolitical shocks, oil prices usually climb over several weeks, often 20–30% within ~60 days,” analyst Jack Prandelli noted on X. “Markets often underprice initial supply risk—the real move happens as physical disruptions impact flows and inventories.”

Recent U.S. economic data has reinforced the upward pressure on yields and the scaling back of rate-cut expectations. The ISM services index rose to 56.1 in February, while ADP private payrolls showed 63,000 jobs added, the strongest reading since July 2025.

Attention now turns to Friday’s nonfarm payrolls and wage growth reports. A hotter-than-expected print could further diminish Fed rate-cut prospects and trigger fresh market volatility.