US Treasuries rise as oil prices fall amid pause in US-Israel conflict with Iran

Oil prices have fallen roughly 39% from their March peak, and the ripple effects are showing up everywhere. US Treasury prices are climbing, equities are rallying, and for a brief window, markets are acting like the worst of the Middle East conflict might be in the rearview mirror.

The numbers behind the relief rally

Brent crude dropped from nearly $118 per barrel in March 2026 to approximately $72 in early July. That’s the kind of decline that makes central bankers sleep a little easier, since cheaper oil means less inflationary pressure across the entire economy.

Treasury markets responded accordingly. The 10-year yield, which had climbed to 4.6% during the worst of the conflict-driven inflation scare, pulled back as oil’s descent took some heat off the inflation outlook.

Equities, meanwhile, have been surprisingly unfazed by the geopolitical chaos. The S&P 500 rose 17.3% from March 30 to July 24, a performance that would be impressive in peacetime, let alone during an active military conflict involving three nations.

A ceasefire held together with duct tape

The market calm traces back to a ceasefire agreed on April 8, mediated by Pakistan. The deal between the US and Iran lasted exactly two weeks before collapsing on April 22. A second diplomatic effort, the Islamabad Memorandum reached in June, provided another window of relative stability.

But that window slammed shut on July 8, when former President Trump declared the ceasefire over during a period of renewed exchanges of fire. Brent crude bounced back to around $82, a 14% jump from its early July lows, as traders repriced the risk of supply disruptions near the Strait of Hormuz.

The Strait matters because roughly a fifth of the world’s oil passes through it daily. Any serious threat to that chokepoint sends energy markets into a panic.

What this means for crypto and broader markets

The relationship between oil prices, Treasury yields, and crypto might not be obvious, but it’s there. When oil falls, inflation expectations cool. When inflation expectations cool, the Federal Reserve faces less pressure to keep rates elevated. And when rate expectations shift lower, risk assets, including Bitcoin and the broader crypto market, tend to benefit.

For investors watching Treasury yields, the 4.6% peak on the 10-year note is a useful benchmark. If yields push back toward that level during the next escalation, it signals that inflation fears are returning. If yields continue declining, it suggests markets are pricing in a more durable resolution.

The oil market remains the single most important indicator to track. Brent at $72 tells a very different story than Brent at $118. With prices currently hovering around $82, the market is essentially saying: we think the conflict is contained but not resolved.

With Trump’s July 8 declaration effectively ending the previous ceasefire, any future diplomatic progress depends heavily on domestic political calculations as much as battlefield realities.

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