Just now, the entire line plunged! Israel conducted a large-scale airstrike on Iran!

The fog of the Middle East conflict shrouds the financial markets.

On the afternoon of the 13th Beijing time, major European stock indices opened lower across the board, and U.S. stock index futures also plunged. Additionally, long-term government bonds in the U.S., UK, Germany, and other countries faced heavy selling, with the ICE Merrill Lynch Volatility Index, often called the “fear gauge” of the bond market, rising to its highest level since June 2025. Analysts point out that concerns over fiscal spending triggered by the tense Middle East situation are sweeping through global bond markets.

Regarding the Middle East situation, according to the latest news from Xinhua, the Israeli Defense Forces announced on the 13th that they have begun a new round of large-scale strikes on infrastructure in Tehran, Iran’s capital. Goldman Sachs warned in a recent report that, due to the ongoing conflict in the Middle East and damage to energy infrastructure as well as disruptions in Strait of Hormuz shipping, the average price of Brent crude oil in March is expected to exceed $100 per barrel.

European and American markets both plunged

On the afternoon of March 13 Beijing time, U.S. stock index futures all fell sharply. As of 4:20 PM, Dow futures were down 0.47%, Nasdaq 100 futures down 0.56%, and S&P 500 futures down 0.46%.

European major stock indices opened lower, with the Euro Stoxx 50 down 1.13%, the UK FTSE 100 down 0.79%, France CAC40 down 1.19%, Germany DAX30 down 0.98%, and Italy MIB down 1.18%.

Analysts note that the escalation of the Middle East conflict has intensified selling in European and American markets, with investors worried that the resolution of the conflict could be further delayed.

It is also noteworthy that long-term government bonds in the U.S., UK, Germany, and Japan experienced a new round of selling.

On Friday, the yield on the 30-year U.S. Treasury bond rose to nearly 4.90%, hitting a one-month high. Since the outbreak of war on February 28, this yield has increased by over 20 basis points, erasing all of this year’s gains. The Bloomberg U.S. Treasury Return Index has nearly zeroed out its year-to-date return.

Additionally, the ICE Merrill Lynch Volatility Index, known as the bond market “fear gauge,” rose to its highest level since June 2025.

Yields on bonds in the UK, Germany, Australia, and Japan also surged across the board, with long-term bonds generally under pressure.

Gang Hu, Managing Partner at Winshore Capital Partners, said that the rise in long-term yields reflects market expectations that the Trump administration will need to spend money to pay for the war and to subsidize consumers facing high oil prices.

According to Xinhua, on the 12th, the acting Comptroller of the U.S. Department of Defense, Jules Hester, stated that the U.S. spent about $11 billion on military operations against Iran last week. This is the first public estimate of the cost of the conflict by the U.S. government.

The website Politico reported that Hester disclosed this “rough estimate” during a defense conference in Washington. He also said that the Office of the Department of Defense Comptroller is preparing a more detailed figure for requesting additional budget, which is expected to be reported to the White House and Congress within a few days.

The Center for Strategic and International Studies estimates that within the first 100 hours of the conflict, the cost of air and naval strikes was about $3.7 billion. The conservative think tank, the American Enterprise Institute, estimates the total cost so far between $11.2 billion and $14.5 billion.

In Europe, governments are facing dual pressures of higher defense spending and potential energy subsidies. EU Commission President Ursula von der Leyen proposed several measures this week, including a cap on natural gas prices. Andrzej Szczepaniak, senior European economist at Nomura Securities, analyzed that European governments might replicate the response during the 2022 energy crisis by issuing joint bonds through the EU to finance crisis-related expenditures, which could create structural pressure on the eurozone bond market.

Chris Arcari, Head of Capital Markets at Hymans Robertson, pointed out that compared to the energy crisis triggered by the Russia-Ukraine conflict in 2022, current fiscal space for governments is more limited, with higher debt burdens and interest costs. The bond market may be less willing to fund such large-scale fiscal expansion this time, and will likely demand higher real yields as compensation.

Israel conducts large-scale airstrikes on Iran

Regarding the Middle East situation, according to Xinhua, the Israeli Defense Forces announced on March 13 that they have begun a new round of large-scale strikes on infrastructure in Tehran, Iran’s capital.

Iranian media reported multiple explosions in western Tehran on the same day.

On the morning of March 13 local time, the Israeli Defense Forces issued a statement saying that over the past day, the Israeli Air Force deployed dozens of aircraft to carry out 20 large-scale airstrikes in western and central Iran, targeting over 200 Iranian sites, including ballistic missile launchers, air defense systems, and weapons manufacturing facilities.

The IDF stated that since the start of strikes against Iran in late February, the Israeli Air Force has conducted hundreds of airstrikes against Iranian targets to weaken missile attack capabilities against Israeli territory.

The blockade of the Strait of Hormuz combined with the Middle East conflict has led Goldman Sachs to forecast that Brent crude oil’s average price in March will surpass $100 per barrel, though they also warn that prices may gradually fall back in the second half of the year.

According to Reuters, Goldman Sachs said on Friday (March 13) that due to the Iran conflict, damage to Middle Eastern energy infrastructure, and disruptions in Strait of Hormuz shipping, the average Brent crude price in March is expected to exceed $100 per barrel, with April’s average dropping back to $85.

Despite the short-term upward pressure on oil prices, Goldman Sachs remains cautious about the full-year outlook. If oil flows are not further severely disrupted, they expect Brent crude to gradually fall back to around $70 within the year.

As of 4:20 PM Beijing time on the 13th, Brent crude futures rose 1.71%, trading at $102.18 per barrel, up over 8% this week; WTI crude futures increased 1.79%, trading at $97.46 per barrel, up over 7% this week.