US Treasury yields climb as Strait of Hormuz tensions rise

U.S. Treasury yields are climbing as tensions over the Strait of Hormuz intensify, pushing the market for Trump agreeing to Iranian oil sanction relief in April down to 36.5% YES from 62% yesterday.

Market reaction

The market for Trump agreeing to Iranian oil sanction relief in April dropped sharply. The U.S. naval blockade in the Strait of Hormuz signals a harder stance from Washington, making sanction relief less likely. The largest single move was a 6-point drop at 9:40 PM, reflecting trader skepticism about any near-term diplomatic deal. Safe-haven demand for gold has also risen on the back of the same geopolitical risk.

Another market worth tracking is WTI Crude Oil hitting $160 in April. With 12 days left in April, further disruptions in the Strait could push oil prices higher. Any sustained constraint on oil flows through the strait would directly support the case for WTI reaching $160.

Why it matters

Daily trading volume on the sanction relief market is $6,018 in USDC, and it takes only $816 to move the price by 5 points. That thin liquidity means larger orders can move the market fast, and volatility is likely to continue.

The probability of Trump conceding to Iranian demands is falling as military postures harden on both sides. At 36.5¢, buying YES pays $1 if the contract resolves positively, a 2.08x return. That bet requires believing in a last-minute diplomatic shift with less than two weeks on the clock.

What to watch

Official statements from the U.S. and Iran are the main catalysts. Pentagon briefings or any change in diplomatic language from Washington or Tehran could move these markets quickly.

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