Donald Trump’s remarks about seizing Iran’s oil triggered a market sell-off, with Asian indices plunging and short-term Treasury yields spiking. The two-year yield—now at 4.85%—suggests investors fear prolonged rate hikes despite energy supply shocks typically warranting monetary stability. Analysts note this “overshoot” reflects bets on Fed tightening amid sticky inflation, though central bankers argue higher energy prices should temper growth, not prompt tightening.

The Federal Reserve faces a credibility test: Markets now price a 20% chance of a 25-basis-point hike this year, up from near-zero expectations months ago. While supply-side shocks like oil price surges historically justify rate cuts, traders fear inflationary expectations could spiral. Critics call the rally in short rates a speculative “twos and spoos” trade gone awry, with neither bonds nor stocks delivering returns.

Meta and Google face historic liability after a $3mn jury verdict found their platforms intentionally addictive to minors. Shares plunged 8%, though broader indices like the S&P 500 edged lower. Legal experts argue the ruling weakens tech’s “First Amendment shield” by separating design from content, but skeptics doubt it will curb ad-driven revenue models sustaining social media advertising giants.

Iran’s economic collapse—amid sanctions and oil export cuts—exacerbates global energy volatility. Meanwhile, the Fed’s dilemma deepens: Raising rates risks crushing growth, yet inaction could revive inflation. As one strategist noted, “The market’s pricing in a crisis that may not materialize, but the Fed can’t afford to ignore the optics.”