Two-year treasuries saw the strongest rise in yields since 2022 due to oil and the Fed

iShares 20+ Year Treasury Bond ETF

Figma

The events of 2026 have shown that investors should no longer blindly rely on the protective features of traditional instruments 

Why traditional protective assets also carry risk  

Morgan Stanley

Morgan Stanley strategists led by Serena Tan have downgraded global equities from "Overweight", which is in line with expectations of above-market growth, to "Equal-weight", i.e. "at market level". At the same time, the bank recommended holding more cachet and U.S. Treasuries, raising its assessment on them to "Overweight," MarketWatch <a href="https://www.marketwatch.com/story/its-time-to-get-defensive-say-morgan-stanley-strategists-increase-cash-and-make-these-moves-00cd9e15?mod=home_lead">writes</a>.

Morgan Stanley has urged investors to shift to a defensive strategy. What is his advice?

Traders piled new rate hikes by the Fed and ECB into forecasts, fearing an inflation shock from the energy crisis in the Middle East

Two-year US government bond yields hit 4% for the first time since June

Fears of stagflation amid war with Iran have led to a sharp decline in the global debt market: in March, the value of bonds fell by more than $2.5 trillion. For the bond market, this could be the largest monthly decline in more than three years, Bloomberg <a href="https://www.bloomberg.com/news/articles/2026-03-23/bonds-lose-2-5-trillion-in-iran-war-wipeout-that-mirrors-2022">writes.</a>

Bond market lost $2.5 trillion due to war with Iran. This is a repeat of the 2022 collapse

The cost of government borrowing for the UK on March 20 jumped to the highest level since the 2008 financial crisis, <a href="https://www.ft.com/content/1e77f7ce-1c93-4852-9970-297636a7d9cf">writes the</a> Financial Times (FT). The yield on benchmark 10-year government bonds exceeded 5%. Investors were trying to factor in rising inflation risks and the increasing likelihood of an interest rate hike later this year, CNBC <a href="https://www.cnbc.com/2026/03/20/uk-gilt-market-interest-rates-boe-inflation-reeves.html">writes</a>.

UK government bond yields hit their highest since the 2008 crisis

UK and US bond yield gap hits highest since 2011

The dollar fell at the strongest pace since January. Negative factors outweighed the oil rally

U.S. Treasury bonds have fallen in price and traders have stopped pledging the likelihood of a U.S. interest rate cut this year. Such sentiment in the bond market Bloomberg <a href="https://www.bloomberg.com/news/articles/2026-03-19/bond-traders-no-longer-price-in-any-chance-of-fed-cut-in-2026">recorded</a> after the Bank of England fueled concerns that global central banks may soon have to act to rein in inflation. Meanwhile, some bond market participants are already hedging against a possible rate hike in the coming months, the agency said.

The market is no longer mortgaging the likelihood of a Fed rate cut this year

Amazon.com, Inc.

Meta Platforms, Inc.

Alphabet Inc.

Oracle Corporation

Investor demand for U.S. investment-grade bonds is four times the size of offerings this year

Amazon has launched the largest bond offering in history for the sake of spending on AI

Gold is displacing US government bonds and becoming a key global reserve asset, says David Einhorn, founder of Greenlight Capital. According to the investor, irrational fiscal policy of Washington and overheated stock market deprive traditional instruments of fundamental support. Under these conditions, the investor chooses precious metals and bets on aggressive rate cuts by the Fed - a scenario that the market is still underestimating.

Reserve asset #1: why does David Einhorn favor gold over Treasuries?

"Whoever signs the deal will no longer be present at the time of repayment," said KBRA analyst Gordon Kerr

Alphabet has decided to float the first 100-year bonds since the dot-com era

The Japanese market has played a crucial role in international investment for decades as a source of ultra-cheap loans. But the situation is changing. Interest rates in Japan are rising, long-term bond yields are approaching the level of other developed countries, and the country's authorities are trying to support the yen. All of this could lead to a large-scale outflow of funds from global markets.

Bonds