Episode summary
Treasuries Sink as Oil Jumps on Iran War, Stoking Inflation Fears | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 36 min · Hosts: Carol Massar, Tim Stenovec · Guests: Michael Contopoulos, Mona Yacoubian, Marcelo P. Lima, Cole Smead
Summary
Iran’s war drove a sharp risk-off move in oil, rates, and credit as markets tried to gauge whether the conflict would become a longer geopolitical shock. The episode argued that the immediate market reaction was being led by higher inflation expectations, with Treasury yields rising after an initial flight to safety, oil jumping on shipping and refinery disruptions, and the dollar strengthening. Michael Contopoulos said the bond market was right to price in more inflation, since the war adds to an already heating inflation backdrop and makes disinflation harder to argue for.
Contopoulos also said the bigger market danger may be credit rather than a recessionary spiral, especially if illiquid private credit products start to reprice under tighter liquidity and higher rates. He dismissed the idea that midterm politics are the main market driver, saying earnings and liquidity matter more. On portfolio positioning, he favored underweighting expensive, liquidity-driven assets such as long-duration names, speculative US technology, and China, while preferring shorter-duration, dividend-paying companies and high-quality fixed income.
Mona Yacoubian said the Middle East conflict is widening, not stabilizing, and could last weeks or months. She argued Iran is largely isolated, its proxies are weakened, and the Houthis remain the key risk to shipping. The show also touched on Block’s layoffs, where Marcelo Lima argued the company was already bloated and that AI is being used too conveniently as a narrative for cost cuts.
Key takeaways
- Michael Contopoulos said the war worsens an already inflationary setup and helps explain why Treasury yields moved higher after the initial safety bid faded.
- Contopoulos said the more serious market risk is credit weakness, especially if illiquid private credit products are forced to sell in a tighter-liquidity environment.
- Contopoulos recommended underweighting long-duration assets, speculative US technology, and China, while favoring dividend payers and high-quality short-duration fixed income.
- Mona Yacoubian said the conflict is widening across the Middle East and expects the fighting to last weeks or months, not days.
- Yacoubian said Iran’s proxies are substantially weakened, though Houthi action could still threaten Red Sea and Gulf shipping.
- Marcelo Lima argued Block’s layoffs were driven more by prior bloat than by AI, and said the stock reaction reflects investors rewarding efficiency.
Notable quotes
“I think the bond market is picking up on that at the moment. Whether that be because of, you know, the obvious oil and natural gas disruptions”
“I think it's it's hard to argue that this company wasn't massively bloated”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy.
Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio. So, as you know, as we've been reporting here at Bloomberg, US and Israeli joint strikes continuing across the Middle East.
This is for a third day as Iran continue to fire missiles at countries around the Middle East in response to that attack, causing major disruptions and a surge in oil prices with Qatar and the UAE lobbying allies to help persuade President Trump to reach for an off-ramp. And earlier this morning, Tim, we heard from a lot of important voices on all of this.
Yeah. US Secretary of Defense Pete Hegsth was joined by Dan Kaine, the US Chairman of the Joint Chiefs of Staff. They spoke at a briefing at the Pentagon.
They took questions. Also, just a little before noon, Wall Street time today, President Trump at a medal ceremony at the White House. He addressed the US and Iran today.
The United States military continues to carry out large-scale combat operations in Iran to eliminate the grave threats posed to America by this terrible terrorist regime. We have the strongest and most powerful by far military in the world and we will easily prevail. The mission of Operation Epic Fury is laser focused.
Destroy Iranian offensive missiles. Destroy Iranian missile production. destroy their navy and other security infrastructure and they will never have nuclear weapons.
The combined impact of these strikes, swift, precise, and overwhelming, has resulted in the establishment of local air superiority.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- oil price shock
- treasury yields
- inflation fears
- middle east escalation
- ai impact on fintech jobs
Companies and tickers mentioned
- Block
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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