The $30 trillion US Treasury market is showing alarming signs of strain, dealers taking largest percentage of new bond auctions this week, as Middle East turmoil fuels unprecedented volatility. Treasury yields surged this month, nearing their worst performance since 2022, driven by investor uncertainty over oil prices and the Federal Reserve's future rate path. Liquidity has deteriorated sharply, with market depth falling by roughly 40-50% in cash markets and 80% in bond futures, forcing some banks to disable auto-quotes. Investors aren't sure whether we have hit peak conflict yet, keeping them sidelined and exacerbating price discovery difficulties.