The Iran war is straining US weapons stockpiles and raising doubts about Washington’s ability to protect the Persian Gulf.
If that weakens the petrodollar and pushes oil producers away from the US financial system, two assets face clear headwinds: the US dollar and US Treasuries.
The petrodollar system helped create structural demand for both.
If oil exporters sell more energy outside the dollar system, fewer oil dollars need to flow back through Wall Street and into Treasury securities.
At the same time, the US government needs to borrow staggering sums to finance its deficits, military commitments, entitlement programs, and interest expense.
That means rising supply of Treasuries could collide with weakening structural demand.
Watch the 10-year Treasury yield.
The 10-year Treasury yield is perhaps the most important financial benchmark in the global fiat system, as it drives valuations and market trends worldwide. It is widely – and erroneously – regarded as the risk-free rate of return.
The 10-year Treasury yield can be thought of as a key barometer of the US dollar-based fiat system – a critical measure akin to its beating heart.
Bond yields move inversely to bond prices. When bond prices fall, bond yields rise.
A rising 10-year Treasury yield signals trouble for the US dollar because it means investors are selling Treasuries, which pushes up the US government’s borrowing costs. That is why the 10-year Treasury yield is a major pain point for the US government.
The 10-year Treasury yield was 3.97% in late February 2026. Now it is around 5.26%, an increase of roughly 129 basis points. 129 bps might not seem like much, but with over $40 trillion in debt and growing, every basis point matters.
