Bond traders are aggressively betting against US Treasuries after the Mideast conflict triggered a sharp surge in oil prices, sparking fresh inflation concerns. Market participants have dumped bullish futures positions in favor of wagers on Treasury losses, marking a dramatic shift in sentiment. The move reflects growing anxiety about the economic fallout from the war.

Oil prices spiked following the conflict, fueling fears that energy costs will drive inflation higher and complicate the Federal Reserve's monetary policy outlook. Traders are now pricing in the possibility of more aggressive rate hikes to combat inflationary pressures. This reversal comes after a period of relative calm in bond markets.

The pivot to shorting Treasuries signals heightened market volatility and uncertainty about the global economic outlook. With inflationary pressures mounting and geopolitical tensions rising, investors are repositioning portfolios to hedge against potential losses in government bonds. The shift underscores how quickly sentiment can turn in response to geopolitical shocks.