LONDON, March 9 (Reuters) - A surge in oil prices to over $100 a barrel as investors brace for a more drawn out war in the Middle East has rippled across markets on Monday, sending various stress
Market stress signals flash amber, then green after Trump calms oil surge fears
Market Reactions to Oil Price Surge and Geopolitical Tensions
LONDON/NEW YORK, March 9 (Reuters) - A surge in oil prices to more than $100 a barrel, as investors braced for a more drawn-out war in the Middle East, rippled across markets on Monday, sending various stress indicators to multi-month highs.
But by afternoon trading, many of these indicators have stabilized after President Donald Trump said he thinks the war against Iran "is very complete" and that the United States is "very far ahead" of his initial four- to five-week estimated time frame.
Here are some of the notable levels in afternoon New York trade.
Oil and Energy Markets
Crude Oil Prices
Brent and U.S. Crude Futures
- Benchmark Brent crude rose as high as $119.50 a barrel, but was last down 6% on the day at $99.37. [O/R]
- U.S. crude futures also fell 6.4% at $85.12 after hitting nearly $120 per barrel.
Government Bond Yields and Swaps
Short-Dated Yields
UK and U.S. Two-Year Yields
- Short-dated government bond yields surged, especially in Britain. The two-year gilt yield ended up 10.5 basis points on the day. [GB/]
- U.S. two-year yields were now down less than a basis point at 3.548%, after earlier hitting their highest since November.
Swap Spreads
Interest-Rate Swap Premiums
- Two-year swap spreads, which capture the premium on the fixed side of an interest-rate swap, used by investors to hedge against rates risk relative to bond yields, narrowed to as little as -19 basis points, the lowest since July 2025.
- U.S. two-year swap spreads tightened, or turned more negative, on Monday to -18 basis points, the lowest level since December. That number reflected lower demand for Treasuries as opposed to interest rate swaps, another risk-free asset.
Market Volatility
Equity Volatility Indices
VIX and European Volatility
- Wall Street's fear gauge - the VIX index of U.S. stock market volatility - jumped to as high as 35.3, its highest since April 2025's tariff turmoil. It was last at 24.92.
- The European equivalent reached 38.12, again its highest since April and was last 31.12 [MKTS/GLOB]
Rate Volatility
MOVE Index
- The MOVE index, the benchmark for U.S. rate volatility, was 81.26 last Friday, the highest since mid-November. The move reflected expectations that Treasury yields across most maturities will move an average of five bps per day in either direction over the next 30 days.
Credit and Currency Markets
Corporate Bond Risk
Credit Default Swaps and High-Yield Spreads
- In corporate bonds, the cost of insuring against defaults jumped. The iTraxx Europe main index, for investment-grade bonds, jumped to 66 bps, its highest since May 2025.
- The crossover index for high yield, or junk debt, rose to over 300 bps, its highest since June.
- In the U.S. credit market, the high-yield bond spread stood at 313 basis points (bps) last Friday, the widest since November last year, according to ICE BAML data.
Foreign Exchange and Swaps
Euro and Swiss Franc Movements
- The euro dropped past 0.90 Swiss francs for the first time since 2015's volatility around the franc's depegging. [FRX/]
Cross-Currency Basis Swaps
- Three-month euro cross-currency basis swaps, or the relative premium for swapping foreign currencies into dollars, fell to 5.5 bps from 9.88 bps on Friday, the lowest since mid-December. Late last week, that was at nearly 12 bps.
Euro Risk Reversals
- Three-month euro risk reversals, which indicate trader demand for the euro versus the dollar, hit their lowest since February 2025.
(Reporting by Alun John and Amanda Cooper in London and Gertrude Chavez-Dreyfuss in New York; Editing by Dhara Ranasinghe, Will Dunham and Andrew Heavens)
