Oil Spikes, Bonds Slide as Trump Signals Prolonged Iran Conflict

Markets are reacting sharply following President Donald Trump’s national address, with oil prices pushing higher while stocks and mortgage bonds move lower. The shift comes as investors digest a more prolonged conflict outlook, with Trump signaling that U.S. military operations against Iran could continue over the next two to three weeks. He also suggested the Strait of Hormuz may not be a U.S. priority to reopen, instead placing responsibility on other nations—an outlook that has added upward pressure to crude prices.

Additional comments around potential strikes on Iran’s energy infrastructure and encouragement to buy U.S. oil further fueled the move in WTI, as markets price in tighter supply and increased geopolitical risk. The lack of a clear resolution timeline has reinforced expectations for continued volatility across commodities and equities in the near term.

On the macro side, labor data painted a mixed but relatively stable picture. Initial jobless claims fell by 9,000 to 202,000, remaining low overall, while continuing claims rose by 25,000 to 1.84 million, suggesting some persistence in unemployment duration. Meanwhile, the Challenger report showed nearly 61,000 job cuts in March, with about 25% attributed to AI-related restructuring. Total layoffs for Q1 reached 217,000, up 56% year-over-year, although comparisons are skewed by elevated government layoffs last year.

Hiring intentions are also softening slightly, with employers planning to add 50,887 workers so far this year, down 6% from 2025 levels. Data from Revelio Labs showed 19,400 jobs added in March, heavily concentrated in healthcare, echoing trends seen in recent ADP data where the majority of job gains came from education and health services sectors.

Looking ahead, markets are focused on the upcoming jobs report, with expectations for 60,000 jobs added and the unemployment rate holding around 4.4%. However, projections from the Chicago Fed suggest a potential uptick toward 4.49%, which could round to 4.5% and surprise markets to the downside—potentially supporting bonds.

Technically, mortgage bonds are testing key support around 100.36. A break below that level could open the door to further downside. Meanwhile, the 10-year yield has reclaimed the 4.33% Fibonacci level but remains capped below resistance at 4.37%, leaving markets in a near-term holding pattern as traders wait for clearer macro direction.