(Bloomberg) — The fast‑moving conflict across the Middle East is heightening investor anxiety and strengthening the case for safe‑haven trades such as Treasuries, gold and the Swiss franc.

Macro traders said all eyes will be on energy markets when trading fully re-opens on Monday. Traders sought haven assets in early trading in Asia, with the US dollar surging and Swiss franc edging higher against major peers while the yen was little changed. The possibility of prolonged turmoil in the Middle East and the ripple effects of higher oil prices are giving money managers fresh reasons to sell equities and shift into safety.

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Traders will be adopting the strategy of “haven first, ask questions later,” according to John Briggs, head of US rates strategy at Natixis. “The scale of the attacks and Iranian retaliation is larger than what the market expected,” he said.

Briggs said Treasuries are likely to extend moves from Friday, when short-term yields sank to levels last seen in 2022. Others are watching energy chokepoints. Roundhill Financial’s Dave Mazza said he’s closely tracking what happens to traffic at the Strait of Hormuz, a narrow waterway handling about a quarter of the world’s seaborne oil trade.

 

“This is about Hormuz risk, not retaliation. If shipping stays open, stocks can work through it,” he said. “If it doesn’t, all bets are off.”

Rich valuations across global equities and credit also make it easier for investors to trim risk, said Ed Al-Hussainy, a portfolio manager at Columbia Threadneedle Investments. Markets have already been on edge over shifting US tariff policy, the disruption from artificial intelligence and stresses tied to private credit.

“The extent of the de-risking is anyone’s guess,” Al-Hussainy said.

Saudi Arabia’s Tadawul All Share Index opened almost 5% lower before paring most of that decline in Sunday trading. Meanwhile, Bitcoin recovered and was trading around $68,000. Put options on the cryptocurrency worth $1.87 billion were concentrated at the $60,000 level on Deribit, signaling persistent demand for downside protection.

Anxiety over the looming military action had started to filter into markets on Friday. Brent crude closed at the highest price since July, while the S&P 500 lost 0.4% on the day, capping its biggest monthly loss since March.

Strategists at Barclays Plc warned against quickly buying any dip. Investors have grown accustomed to geopolitical flare-ups that fade fast, but this episode risks lasting longer, wrote Ajay Rajadhyaksha, the firm’s global chairman of research, citing the potential for U.S. casualties, strikes on Iranian leadership and disruption to Hormuz traffic.

“The risk-reward doesn’t seem compelling,” he said. “If equities pull back enough (say over 10% in the S&P 500), there is likely to come a time to buy. But not yet.”

Kevin Gordon, head of macro research and strategy for Charles Schwab & Co.

“To the extent that sends oil prices higher on a somewhat sustained basis, there could be a near-term inflationary scare that spooks the equity market. I do think investors need to continue to think about the distinction between front-page risk and bottom-line risk, though. If this conflict has no meaningful downstream impacts on growth or earnings, any negative stock market response has the potential to be short-lived.”

Vincent Mortier, chief investment officer at Amundi

“In the short-term, while waiting for more clarity on the impacts of the events, we can expect a spike in oil price (5% to 10%), lower US rates, gold up and equities down a little (around 1%). This also serves as an excuse for some well-deserved profit taking when markets are at all-time highs.”

Brendan McKenna, an emerging market strategist at Wells Fargo in NY

“This is a shock that push EM weaker,” said Brendan McKenna, an emerging market strategist at Wells Fargo in NY. “The Iran response has been more hostile than anything we saw previously, the Strait is effectively closed and the US-Israel cooperation is also more aggressive toward Iran. That shock, combined with the theme that EM is overvalued and overowned at current levels, should drive a selloff in the early days of the conflict.”

Gregory Faranello, head of US rates at Amerivet Securities

“The military operation with Iran could last for a few weeks. We don’t believe it drags on. In the context of the past four years, US Treasuries have been range bound and there is room below for yields, if investors want safe haven. Ultimately yields will be driven by the Fed and economy. This operation in Iran does not change US fundamentals.”

Frank Monkam, head of cross asset macro strategy and trading at Buffalo Bayou Commodities

“This Iran strike over the weekend constitutes an almost a perfect selloff catalyst for an already fragile equity market, and the recent uptick in volatility is likely to extend in the shorter term. That being said, geopolitical flare-ups typically tend to create temporary selloffs rather than sustained bear markets, so I expect equities to eventually stabilize once Middle East developments are fully digested.

In the grander scheme, the macro question is around the potential impact of an oil shock on an economy that’s flashing signs of stagflation-lite based on recent readings. Therefore, I also expect policy volatility to move back to forefront in response over the weeks and months ahead.”

Rajeev de Mello, global macro portfolio manager at Gama Asset Management SA

“A prolonged escalation in hostilities between the United States and Iran would transmit to emerging markets first and foremost through the oil complex.

The majority of large EM economies are net oil importers, and energy remains a meaningful share of both their import bills and inflation baskets. Higher crude oil prices widen current account deficits, compress real incomes, and force central banks to choose between supporting growth and containing inflation expectations. This is particularly relevant given the strong recent performance across EM risk assets: positioning and sentiment have improved, leaving less margin for an adverse terms-of-trade shock.”

Joe Gilbert, portfolio manager at Integrity Asset Management

“Energy stocks and metals will be the leaders as well as real estate and utilities — the more classic defensive groups. Defense stocks will get a bid as well because of the increased demand for their products. Consumer discretionary stocks will be losers because of higher oil prices, which will hurt airlines and retailers.

Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management

“I expect equity markets to trade substantially lower as this should dampen the sentiment. The main downside risk is coming from oil.

“Should oil prices remain elevated for a sustained period, it might impact growth prospects and inflation numbers, eventually making it harder for the Fed to cut rates. This could derail the recent rally we saw in cyclicals. If the impact on oil remains limited though, I would rather see any bigger dip as a long term buying opportunity.”

Madison Faller, global investment strategist, and Erik Wytenus, head of EMEA investment strategy, at JPMorgan Private Bank

“For investors, the ripple effects could reach across the global economy and financial system. Energy is central to these risks, with the Middle East serving as a critical hub for global oil and gas flows. Even the possibility of disruption can quickly affect production costs, consumer prices, monetary policy expectations, market sentiment, and the broader outlook for growth and inflation.”

“Our constructive outlook for the year stands, but these events reinforce the reality of a fragmenting global order. Now more than ever, portfolios should be built for resilience—with both gold and exposure to sectors governments consider strategically vital.”

Maxence Visseau, Dubai-based director of research at investment firm Arkevium

“I’d expect yields down 5 to 10 basis points at a minimum on the initial move,” he said referring to Treasuries. “But the complication is oil. If crude spikes toward $80 to $90 on any Hormuz disruption, the long-end gets caught in a tug of war between safe-haven demand and repricing of inflation expectations.

You could see the curve steepen aggressively as the market starts pricing out Fed cuts and breakevens blow wider. The Fed is already stuck at 3.5-3.75% with inflation near 3% — an energy shock makes their job significantly harder and could force a hawkish tilt.”

–With assistance from Levin Stamm, Julien Ponthus, Bre Bradham, Alexandra Harris, Matthew Burgess, Bernadette Toh, Esha Dey, Alexandra Semenova, Matthew Griffin, Ruth Carson, Anya Andrianova and Carter Johnson.

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