What stopped U.S. President Donald Trump was neither Congress nor allies, but the bond market. Whenever the government takes unconventional actions, the so-called "Bond Vigilantes" dump bonds, driving up mortgage rates and turning public sentiment against the administration. Yet Iran is mocking even America's bond market, claiming that true power lies with them. Why?
Nikkei: "Trump Sought to End War as Bond Yields Rose"
Japan's Nihon Keizai Shimbun (Nikkei) reported on the 20th that the Bond Vigilantes were behind Trump's attempt to bring the Iran war to an early end. The analysis suggests that Trump reacts more sensitively to rising bond yields than to stock prices. Risk-sensitive bond investors sell off even U.S. Treasuries when they feel heightened anxiety over war. As sellers increase and bond prices fall, yields — which move inversely to prices — rise, combining capital losses on sales with fixed interest payments. Rising yields typically push market interest rates higher, which in turn leads to higher mortgage rates that directly affect middle-class livelihoods. Nicole Whitlock of Missouri, quoted by Nikkei, said, "The rate on my 30-year mortgage with $250,000 remaining is 6.8%," adding, "Looking around, no one can afford to buy a house."
Trump had already backed down immediately after interest rate surges, even before the Iran war. His partial suspension of reciprocal tariffs, agreement to reduce additional tariffs on China, and denial of military action against Greenland all came at moments when yields had spiked. The effect even extended to wartime strategy and tactics. U.S. Treasury yields, which hit an eight-month high of 4.44% intraday on May 23, fell back to 4.30% after Trump posted on social media that he had "ordered a delay in attacks on Iran's infrastructure."
Edward Yardeni, the American strategist who coined the term "Bond Vigilantes" in 1983, said, "The foundation of the 'vigilantes' is that when policymakers fail to maintain discipline, the market enforces it on their behalf," adding that it "demonstrates how Wall Street holds clear influence over policy decisions in Washington."
Ghalibaf Scoffs at Treasury Market: "What Matters Is Tangible Oil"
Amid this, Iranian Parliament Speaker Mohammad Bagher Ghalibaf, who represents Iran's negotiations, provoked the U.S. by dismissing its Treasury market as nothing more than a "house of cards."
On the 20th (local time), Ghalibaf posted on X: "Trading digital oil on 'Vibe' resembles hedging Treasuries on 'Vibe' when the Strait of Hormuz crisis is rampant." He added, "At least oil prices have 'Dated Brent' (physical Brent cargoes with specified delivery dates), but Treasuries have nothing but 'Vibe.'"
He also shared the command "EUCRBRDT Index GP," which displays real-time Dated Brent prices. It is a command used on the Bloomberg terminal, the leading U.S. platform for real-time financial data analysis and one of the most widely used tools on Wall Street.
Ghalibaf's post targets two financial markets. One is futures and derivatives trading that occurs when no actual crude oil is being traded, and the other is investor psychology that drives purchases of U.S. Treasuries as safe-haven assets during geopolitical crises. Both, he argues, are nothing but illusions.
The spot market, which is closest to the physical reality of oil, is inevitably swayed by control over the Strait of Hormuz. In the current wartime conditions, spot prices are exceptionally higher than futures prices that reflect future risks. Ghalibaf is essentially arguing that Iran — which physically blockades real assets — holds greater market power than crude oil futures or Treasuries that move on vague sentiment.
In reality, the U.S. Treasury market has grown more volatile as China, once its most reliable backer, has sold Treasuries and shifted into gold. As the share of hedge fund investors, who trade frequently, has risen, the U.S. Treasury market has become prone to swings even from minor shocks.
