"Reenactment of Liberation Day turmoil? Global markets hit by triple onslaught, cross-market volatility soaring"

Notice that market pressure is building up at the fastest pace since the tariff impact last year. With the Iran war pushing up oil prices, raising borrowing costs and strengthening the dollar, this combination is simultaneously putting pressure on almost every corner of the financial markets. A Bank of America index shows that the future price volatility implied by global stock, interest rate, currency, and commodity options markets has surged to 0.79, approaching the peak of 0.89 reached during the turmoil of last April's "Liberation Day". At that time, President Trump's large-scale tariff policy caused severe market turbulence. The index above zero indicates that pressure is higher than normal levels. The source of this pressure is different this time: with Saudi Arabia, Iraq, the UAE, and Kuwait collectively cutting oil production, the Strait of Hormuz is almost at a standstill. As oil prices soar and inflation concerns resurface, the escalating conflicts in the Middle East have already led to the evaporation of trillions of dollars in global stock market capitalization in the past two weeks. Mandy Xu, head of global market derivative market intelligence at the Chicago Mercantile Exchange, said, "This is the first time since last year's 'Liberation Day' sell-off that the implied volatility of all major asset classes is above their long-term average levels," "This is usually a signal of a macro crisis." Market pressure approaches Liberation Day levels The S&P 500 index is heading towards its third consecutive week of decline, the longest such period in a year. Despite a rebound on Friday, the yield on two-year government bonds has surged more than 30 basis points this month. Cross-asset volatility has skyrocketed, with the MOVE index tracking expected bond volatility soaring to its highest level since June last year, while the Cboe index tracking oil volatility hit a high point for 2020 earlier this week. Even the credit markets are showing signs of anxiety, with the Cboe index tracking junk bond volatility nearly tripling from its level in January. Bank of America's cross-market risk indicator integrates the implied volatility of global stock, interest rate, currency, and commodity options markets into one number, making it a real-time measure of traders' expectations of global market turbulence. For most of the past year, the financial environment has been unusually loose, which to some extent supported stock prices. Now, this cushion is rapidly disappearing. The Iran crisis has exposed the vulnerabilities accumulated during the calm period, especially in heavily indebted market areas, as investors are already uneasy about the impact of artificial intelligence on certain businesses. In addition, the increasing cracks in the private lending sector are exacerbating fears. Rocky Fishman, founder of research firm Asym 500, said, "Looking at just the volatility of the S&P 500 index will underestimate the true volatility levels of the current global market. Commodities (especially oil) and global stock market volatility are particularly severe, and the extremely high implied-realized volatility risk premium for oil suggests that the market is worried that the situation will deteriorate further."