Stock, bond, and gold triple sell-off: When safe-haven assets fail, is cash king really the right answer?

Since the U.S. and Israel launched military operations against Iran in late February 2026, geopolitical risks in the Middle East have surged sharply, triggering intense volatility and re-pricing in global capital markets. Facing concerns over potential energy supply disruptions and inflation rebound due to the war, investors have quickly adjusted their asset allocations. Recent data shows that traditional safe-haven assets like gold and U.S. Treasuries have underperformed during this crisis, while the S&P 500 index in the U.S. has also faced valuation downgrades. Meanwhile, the size of U.S. money market funds has hit a record high, indicating a large-scale shift of funds into highly liquid assets. Is the current market already entering a defensive phase where “cash is king”?

S&P 500 drops 4%, risk assets face testing

After the outbreak of conflict in the Middle East, the S&P 500 has come under significant pressure amid geopolitical turbulence. Rising oil prices have increased corporate operating costs and rekindled fears of stagflation. With the Federal Reserve maintaining high interest rates, risk appetite has cooled considerably. High rates combined with war uncertainties have weakened stock valuations, prompting institutional investors to adopt defensive reductions, leading to phased outflows from equities. Since the war began, the S&P 500 has declined about 4%.

Gold’s safe-haven glow dims, down 10% since the conflict

Since late February, when the U.S. and Israel attacked Iran, gold prices briefly rose from $5,230 to over $5,500, but then declined, currently around $4,705, a drop of about 10%. Rising oil prices have fueled inflation concerns, while stronger U.S. Treasury yields and the dollar have contributed to gold’s decline. Additionally, amid broad asset declines, investors have sold gold to cover losses elsewhere, leading to outflows from gold ETFs.

(Weekly gold price down 8%; referencing the Russia-Ukraine war, will gold continue to fall?)

U.S. Treasury yields rise, bond prices face correction

U.S. Treasuries, traditionally viewed as safe assets, are also feeling the pressure. Due to inflation fears, the 10-year U.S. Treasury yield has surged from 3.95% to 4.27%, an increase of 8%. Since bond prices move inversely to yields, this rise indicates a significant decline in bond prices. This suggests that, with inflation risks still present, the duration risk of long-term U.S. Treasuries has increased markedly. Relying solely on Treasuries for geopolitical risk hedging is now under market scrutiny.

Cash is king? Funds flow into money market funds

Asset volatility has driven capital into highly liquid money market funds. According to Crane Data LLC, the size of U.S. money market funds recently soared to a new high of $8.276 trillion, an increase of $36 billion since late February.

With the Federal Reserve holding interest rates steady, money market funds offer low volatility, capital preservation, and high liquidity, making them attractive as “cash-like” assets. This data highlights that, when gold and Treasuries underperform, market funds are indeed shifting toward a defensive stance where “cash is king.”

Bitcoin’s divergence: digital assets still risky

After the conflict erupted, Bitcoin briefly dropped from $68,000 to $63,000 but has now recovered to around $71,000, representing a 4% increase. Has Bitcoin become a safe-haven asset during this conflict?

In fact, since a sharp decline last October, Bitcoin has fallen nearly 20% this year. If the war continues to escalate, all assets may struggle to avoid declines.

This article: “Stocks, Bonds, and Gold in Triple Trouble—When Safe-Haven Assets Fail, Is Cash the Real Solution?” was first published on Chain News ABMedia.