Bitunix Analyst: Middle Eastern conflict, Japanese government bond chaos, and U.S. regulatory restructuring are unfolding simultaneously, with global markets in a high-volatility political and financial cycle

Mars Finance News: On May 18, the core of the global market is no longer just economic data—geopolitical and fiscal risks are beginning to directly dominate asset prices. In the latest call between Trump and Netanyahu, they have publicly discussed restarting military strikes on Iran, and U.S. media further revealed that the U.S. national security team will enter the situation room to assess military options. At the same time, drone attacks around the UAE nuclear power plant and problems with submarine cables in the Strait of Hormuz have come to the forefront, indicating that market concerns have broadened from energy supply to the security of global shipping, communications, and financial infrastructure.

Against this backdrop, the market has started to reprice “war inflation” and “long-term high interest rates.” U.S. interest rate futures are already pricing in that the Federal Reserve will raise rates again in early next year with a probability exceeding 50%, and the 30-year U.S. Treasury yield has moved back above 5%. Notably, Kevin Warsh—who is set to take over as Federal Reserve Chair—is seen by the market as clearly hawkish, and Wall Street has begun to believe that the future direction of U.S. policy may no longer be simply about cutting rates to prop up the market, but rather suppressing long-end inflation and risks in the bond market by maintaining high interest rates.

Another risk that the market has been overlooking but is quickly worsening comes from Japan. As oil prices and import costs continue to rise, news has emerged that the Japanese government may resume and re-allocate supplementary budgeting, meaning the market is starting to worry that Japan is entering a “fiscal expansion + upward pressure on interest rates + yen depreciation” triple imbalance. Recently, Japan’s 30-year government bond yield has reached a historical high, indicating that one of the world’s largest sources of low-interest-rate funds is gradually losing stability.

Meanwhile, the crypto market continues to show a high-volatility structure. Recently, BTC fell below the $80,000 integer level last Friday, showing that risk-taking appetite remains insufficient. The market is not short on liquidity; rather, funds are waiting for geopolitical developments, U.S. interest rates, and regulatory policies to provide the next direction. If the situation in the Middle East escalates further, or if U.S. Treasury yields continue to break higher, the volatility of global risk assets could again rapidly expand.