Bond Market Nears ‘Inflection Point’ After War-Related Selloff

A rush by bond traders to unwind US futures positions amid the selloff triggered by war in Iran is running its course, setting the stage for new wagers that will determine whether the rout reverses or deepens.

Just before hostilities broke out on Feb. 28, positions in US bond futures were heavily skewed toward lower rates, in part reflecting investor concerns about the outlook for growth. Those worries were abruptly replaced by inflation fears as the war sparked a surge in oil prices, prompting traders who were caught off guard to exit their positions, in turn accelerating the market decline.