Tension in markets nears highest since Trump imposed duties

The level of tension in global financial markets has approached the maximum in almost a year - since the introduction of large-scale duties in the U.S., the Bank of America index showed. The war in the Middle East is pushing up oil prices and borrowing costs, as well as strengthening the dollar. This combination is putting pressure on literally every aspect of the market, Bloomberg writes.

The Bank of America index, which reflects expected volatility in global markets, rose to 0.79, the highest since April 2025, Bloomberg reported. A year ago, after the announcement of large-scale duties by U.S. President Donald Trump, the index jumped to 0.89.

This time, the sources of pressure were the blockade of shipping in the Strait of Hormuz, which is crucial for global oil supplies, and the reduction of crude production in the Middle East due to the U.S. war with Iran. Over the past two weeks, the escalation of the conflict has led to the loss of trillions of dollars of capitalization on world stock markets, as rising oil prices have increased fears of a new wave of inflation, Bloomberg writes.

"For the first time since last year's sell-off, implied volatility across all major asset classes is trading above long-term averages," Bloomberg quoted Mandy Xu, head of analysts at Cboe Global Markets, as saying. According to her, this usually signals a macroeconomic crisis.

The U.S. S&P 500 index has been declining for three consecutive weeks, its longest streak in a year. Since February 27, the index has fallen by 2.9%. The MOVE index, which reflects expected fluctuations in the bond market, rose to its highest level since June 2025, while the Cboe index, which tracks volatility in oil prices, reached its highest level since 2020 this week, Bloomberg writes. Signs of strain are also appearing in credit markets: the Cboe index, which measures the volatility of high-yield bonds, has nearly tripled from its January values, the agency notes.

The crisis around Iran is starting to show vulnerabilities in the market, especially in the highly leveraged segments, where investors are also concerned about the impact of AI on individual business models and challenges in the private credit sector.

"If you look only at the volatility of the S&P 500, you can underestimate the current level of turbulence," said Rocky Fishman, founder of the Asym 500 research company. Particularly sharp fluctuations are observed in commodity markets, primarily in the oil market, which increases fears of further deterioration of the situation, quotes the words of the analyst Bloomberg.

This article was AI-translated and verified by a human editor