美元和加密货币都在从中东局势中受益，这是一种不寻常的现象

[kim]

By Vivien Lou Chen

Traditional havens like gold and Treasurys have not done as well since U.S.-Israeli strikes against Iran began on Feb. 28.

The military conflict in the Middle East, initiated by U.S. and Israeli strikes against Iran on Feb. 28, is producing unusual winners and losers in the financial market.

Two of the surprising beneficiaries of the Iran conflict have been the battered U.S. dollar and volatile, speculative cryptocurrencies.

That's not usually the mix of assets treated like havens by investors. Ordinarily, military conflicts trigger a flight into the safety of Treasurys and gold (GC00) (GCJ26), but that's not happening this time around.

One big reason is that the war in the Middle East is keeping the price of Brent crude (BRN00), a global benchmark for oil, above $100 a barrel. Higher oil prices, in turn, are stoking the risks of U.S. inflation and upending the usual narrative around traditional winners and losers in financial markets during wartime.

The prospects of higher inflation have produced a notable selloff in U.S. government debt during March, leading to the biggest two-week jump in 10-year BX:TMUBMUSD10Y and 30-year BX:TMUBMUSD30Y Treasury yields in almost a year on Friday.

Meanwhile, reduced market-implied chances of 2026 interest-rate cuts by the Federal Reserve are giving the dollar a boost. The ICE U.S. Dollar Index DXY, a measure of the greenback against a basket of six major peers, has jumped more than 2% this month - and the strength of the currency is undermining the performance of gold.

Separately this month, bitcoin (BTCUSD) and ether (ETHUSD) have each outperformed the S&P 500 SPX, which is down 2.7% in March. Cryptocurrencies have gained an edge due to their cross-border accessibility at a time when many people in the Middle East are being displaced due to the conflict.

Read: Here's how the Iran conflict may have helped crypto prices recover, even as stocks struggle

"This is what happens when you have a conflict that triggers stagflation risk: It becomes difficult to trade it," said New York-based strategist Daniel Tenengauzer at ITC Markets, in a phone interview. "What's going on is not a traditional risk-on or risk-off backdrop."

Indeed, all three major U.S. stock indexes DJIA SPX COMP were trading higher on Monday as investors tried to recoup recent losses, even though the war in Iran entered a third week and the situation remains far from stable. The main "vulnerability" that has not been priced into markets is the possibility of "a persistent increase in inflation," said Tenengauzer.

With just two days left before Fed officials release their updated interest-rate forecasts on Wednesday, fed-funds futures traders currently see a 40.8% chance that policymakers will reduce interest rates only one time this year, and a 34.4% likelihood of no 2026 cuts. That's up from 16% and 3.4%, respectively, a month ago.

The reduced likelihood of multiple Fed rate cuts by December has strengthened the dollar, which moves in correlation to the path of U.S. interest rates relative to the rest of the world. The ICE dollar index was near the 100 level, one of its highest readings since last November, and has strengthened overall since Feb. 28, when the U.S. and Israel began to launch airstrikes against Iran.

As the war in the Middle East threatens to push U.S. inflation higher, traders will be attuned to the possibility that Federal Reserve officials might use their interest-rate forecasts on Wednesday to push back on expectations for 2026 rate cuts.

Those forecasts could "easily" come out in a way that demonstrates policymakers are more concerned about inflation as they acknowledge a "fresh energy shock" that complicates the entire disinflation narrative, according to Stephen Innes, managing partner at SPI Asset Management in Bangkok. "That dynamic is why the dollar continues to trade like a currency with sturdy legs under its stride," Innes wrote in a note on Monday.

The dollar's strength has sapped the appeal of gold, which is traded in the U.S. currency and becomes more expensive for foreign investors. On Monday, gold futures were down 1.4% near $4,995 an ounce on Comex, after having reached nearly $5,248 at the end of last month.

Separately, bitcoin rose almost 3.1% to around $73,770, up from $66,958 at the end of February, while ether was up 7.9% near $2,298, versus almost $1,958 on Feb. 28.

-Vivien Lou Chen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
source: https://www.tradingview.com/news/DJN_SN20260316009481:0/