The renewed military conflict between the United States and Iran has led to a rise in international oil prices and U.S. Treasury yields. As geopolitical tensions in the Middle East escalated, U.S. and European stock markets declined. However, the dollar weakened amid caution ahead of the U.S. employment report.
On September 1, the U.S. Central Command reported that it had detected preparations by Iran's Revolutionary Guard to install mines and launch rockets near the Strait of Hormuz, prompting strikes on related facilities. In response, Iran fired missiles at a U.S. military base in Jordan. This marks the first direct U.S. attack on Iran in nearly a month.
President Donald Trump warned that he would "obliterate" Iran's key oil export facility on Kharg Island. The U.S. military stated that the attack was a preventive measure to protect the freedom of international trade.
Concerns about potential supply disruptions in the Strait of Hormuz, a critical route for global oil transport, caused Brent crude to jump 2.71% to $90.49 per barrel on August 31. The Strait is a vital passage for Middle Eastern oil, and international prices are highly sensitive to military tensions in the region.
The rise in oil prices also impacted the Treasury market. The yield on the U.S. 10-year Treasury note increased by 0.03 percentage points to 4.75%. Inflation concerns resurfaced due to rising oil prices. Yields on 10-year bonds in Germany and Japan also rose by 0.05 and 0.03 percentage points, respectively.
Stock markets reacted to both the Middle East tensions and rising Treasury yields. The S&P 500 index fell by 0.33%, while the European Stoxx 600 index dropped by 0.62%. The volatility index (VIX), which reflects market anxiety, rose by 3.40%.
In contrast, the dollar showed weakness. Typically, the dollar strengthens during times of heightened geopolitical risk, but caution ahead of the U.S. August employment report had a greater impact. The dollar index, which measures the dollar against six major currencies, fell by 0.29% to 99.41. The euro and yen appreciated by 0.3% and 0.2%, respectively. In New York, the won-dollar exchange rate was 1,368.4 won, down 0.2 won from the closing price in Seoul.
U.S. Treasury Secretary Scott Basset addressed recent concerns about instability in the Treasury market, stating, "I don't know where the chaos is coming from." He emphasized that while a large fiscal deficit continues, the focus should be on economic growth, arguing that the debt issue should be resolved by increasing growth rates rather than through austerity. He also predicted that the inflation pressures from rising oil prices would gradually ease.
In a separate interview, President Trump reiterated that "interest rates are too high," putting further pressure on the Federal Reserve. The market is closely watching whether the U.S.-Iran conflict will lead to actual disruptions in oil transport through the Strait of Hormuz and how the employment data will influence future interest rate decisions.
* This article has been translated by AI.
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