#Gate广场四月发帖挑战 Negotiations end in failure, the Strait of Hormuz blockade, gold and U.S. Treasuries both plummet!

Due to the weekend's unsuccessful US-Iran peace talks, coupled with the US plan to blockade the Strait of Hormuz intensifying the global energy supply shock, market concerns about inflation rapidly heated up. Shortly after the market opened on Monday, gold and U.S. Treasuries both declined, and once again, a strange scene of “safe-haven assets not safe” emerged in a panic environment...
Market data shows that spot gold prices once dropped sharply by 2.2% after opening today, trading around $4,669 per ounce, nearly erasing all of last week's gains.
Meanwhile, US Treasury futures also fell significantly, with the 10-year Treasury yield rising about 5 basis points after the open.

The overall panic atmosphere in global markets at the open today is undoubtedly evident— as tensions in Iran escalate again, S&P 500 futures fell about 1.1% in early trading. Benchmark Brent crude oil futures jumped about 7.5% at the open, reaching $102.37 per barrel. Among traditional safe-haven assets, with gold and Treasuries almost following risk assets in a sell-off, only the US dollar was able to serve as a temporary “safe harbor” for investors in the early morning. ICE US dollar index surged over 40 points after opening in Asian trading on Monday, breaking above the 99 level. In non-USD currencies, risk-sensitive currencies like the Australian dollar and British pound declined 0.7% and 0.5%, respectively. The USD/JPY rose 0.3% to 159.78 yen.

Fiona Cincotta, senior market analyst at City Index, said, “Weekend news completely shattered any optimism about peace negotiations. The dollar has become a safe asset, oil prices soared, and all other assets were sold off. On the other hand, we also see that markets sometimes overreact. I think especially in this situation, it’s very difficult for the market to truly price things correctly because there are too many uncertainties and unknown factors.”

The US military has now announced that after the weekend negotiations with Iran failed to reach a lasting peace agreement, a blockade against Iran will begin at 10 a.m. Eastern Time on Monday, ( and 10 p.m. Beijing time on Monday, ). Previously, the ongoing war in the Middle East for six weeks continues. It is reported that after the US-Iran negotiations failed to reach an agreement over the weekend, President Trump stated that the US would blockade the Strait of Hormuz. He posted on social media: “Any Iranian who dares to fire at us or peaceful ships will be blown to pieces!”
Meanwhile, Iran stated it would not allow the US to blockade this waterway. Before the conflict erupted, the Strait of Hormuz carried about one-fifth of the world's oil and liquefied natural gas. The escalating rhetoric from both sides has led outsiders to be even more skeptical that the fragile ceasefire agreement reached last week can bring lasting peace.

“Many traders expected the ‘peace dividend’ on Thursday and Friday to disappear at the start of this week,” said Francis Tan, chief strategist at Indosuez Wealth Asia in Singapore. “Failure of negotiations will shift market sentiment back to defense.” The market again shows that “safe-haven assets are not safe,” and many analysts say that the increasingly fragile ceasefire between Iran and the US is refocusing bond market attention on inflation, reinforcing expectations that interest rates will stay high for longer. This concern is also troubling gold at the moment. Among major safe-haven assets, only the dollar seems to benefit from this. After the peace talks failed and the agreement was declared over, for investors in the $31 trillion US debt market, the primary concern is that higher energy costs will exacerbate already high inflation, delaying the Federal Reserve’s rate cut actions.
Traders and strategists from Pacific Investment Management Company (Pimco), Brandywine Global Investment Management (Brandywine Global Investment Management), and Natixis North America are preparing to deal with yields remaining high—and before the inflation outlook becomes clearer, many are reluctant to make major adjustments to their asset allocations.
John Briggs, head of interest rate strategy at Natixis North America, said, “The pendulum has indeed swung back to inflation. The US labor market is at best stable, and structurally not very active, but for now, inflation is on the agenda.”

Last Friday’s US March inflation data showed the CPI increased at the fastest monthly rate since 2022. This pushed the 10-year Treasury yield above 4.3%, prompting traders to cut back on bets of rate cuts this year.
Nick Twidale, chief market analyst at AT Global Markets Australia Pty, said before the Asian session opened, “I think due to risk aversion, oil prices will open higher along with the dollar on Monday. I expect the stock market to suffer significant hits, and Treasury yields to be pushed higher. For me, a key point in the past few days is that shipping volume through the Strait of Hormuz remains below 10% of normal levels, which is disappointing. Most investors had hoped for more shipping passing through the strait after the ceasefire was announced.”

Capital analyst Kyle Rodda pointed out that for US Treasuries, the market is weighing safe-haven demand against inflation readings. Once oil prices are pushed higher by concerns over the Strait of Hormuz, inflation expectations will quickly reprice, setting a bottom for yields. He further wrote, “The key question on Monday is how the market interprets it: whether the threat over the weekend is seen as a temporary breakdown of negotiations or a structural collapse of the ceasefire framework. This distinction will determine whether safe-haven flows quickly fade or extend further. Clearly, the situation is quite volatile, so we need to watch for any new developments when negotiations restart or whether the public statements from the US and Iran become more confrontational again.”

In the forex market, Fiona Lim, senior strategist at Maybank, said, “Weekend news may be somewhat disappointing, but it’s not entirely unexpected. When markets open on Monday, the dollar may further strengthen. Some Asian currencies, especially energy-importing currencies—won, Philippine peso, yen, Thai baht—began to weaken before the weekend and may continue to be under pressure this week.”