US Treasury yields climbed across the curve after President Donald Trump signaled potential escalation in the conflict with Iran, pushing oil prices higher and reviving inflation concerns. Markets scaled back expectations for Federal Reserve rate cuts as higher energy costs threatened to keep inflation elevated, while global bond yields also moved higher as investors reassessed policy paths. In remarks Wednesday evening, Trump said the end to the conflict is "very soon" but also indicated it could escalate further in the next two to three weeks.

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A rapid stock rally driven by hopes of a swift end to the Iran war lost momentum as mixed signals from Washington revived uncertainty. Investors piled into equities to avoid missing a potential rebound, but volatility in oil and conflicting geopolitical developments continue to drive sharp market swings. Trading is increasingly dominated by positioning and short-term sentiment rather than fundamentals.

Investors poured nearly $1 billion into leveraged funds betting oil prices will fall, even as the Iran war drives crude sharply higher and disrupts global supply. The split positioning highlights deep uncertainty in energy markets, with both bullish and bearish bets rising amid ongoing geopolitical volatility.

The US economy is facing several potential risks, including surging oil prices due to the Strait of Hormuz closure, which could drive Brent crude to $200 per barrel. Economists remain calm, citing the US's reduced oil dependence and futures markets predicting a price drop. Another risk is the stress in the private credit market, which could spread to banks and the broader economy if companies struggle to secure financing. Additionally, the AI boom, which has driven economic growth, may face challenges due to capital constraints and energy issues.

The US Treasury is convening domestic and international regulators to assess risks in the private credit sector, citing concerns around opacity, illiquidity and insurer exposure. The effort follows recent market stress and increased scrutiny of underwriting standards and complex securitized products. The meetings are scheduled to begin this month and continue through early May.

President Donald Trump has endorsed a two-step plan to resolve a funding standoff for the Department of Homeland Security, backing Senate Majority Leader John Thune's approach to fund most of the DHS immediately and use budget reconciliation to fund immigration enforcement. The plan aims to ensure all federal workers are paid and to fund border security for three years.

The Trump administration is set to revise steel and aluminum tariffs, applying a 25% duty to the full value of finished imported goods rather than just their metal content. While the headline rate is lower, the change could increase overall costs for many imports and boost government revenue. The move aims to simplify compliance and support domestic manufacturing.