Major oil-producing countries in the Middle East have been reducing their holdings of U.S. government debt since the U.S.-Israel war against Iran began on Feb. 28, and the reason appears to lie in the need to get more liquid.

The need for liquidity following the outbreak of the war can be seen in other parts of the financial market such as equities, which have fallen for five straight weeks; credit markets, via redemption demands on funds; and corporate bonds, where credit-default swaps are being used to hedge the risks of the Middle East conflict.

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What’s noteworthy about recent developments in the $30.6 trillion Treasury market is that U.S. government debt is traditionally seen as a source of safety during uncertain times, and yet investors have pulled back over much of this month anyway due to a growing risk of inflation. On Monday, though, inflation fears were superceded by worries about an economic slowdown — creating a rally in Treasurys that sent most yields lower.

For most of March, it was inflation fears that dominated the bond market. Ten-year BX:TMUBMUSD10Y and 30-year BX:TMUBMUSD30Y Treasury yields jumped by 47.8 basis points and 35 basis points, respectively, this month through Friday, to their highest levels since mid-July of last year.

Custodial holdings, a proxy for foreign official demand, have dropped to the lowest levels since 2012, when the Treasury market was roughly one-third of its current size, according to strategists at BofA Securities.

These holdings have also fallen by $66 billion since the start of March, said BofA strategists Meghan Swiber and Eleanor Xiao. In addition, Middle East oil exporters — which own around 3.5% of the total Treasurys held by foreign investors, or a little over $300 billion — may be contributing to this decline, they wrote in a note on Monday. Saudi Arabia is among the major oil exporters in the Middle East that hold Treasurys.

“The market is very, very jumpy when it comes to the risks to foreign demand” for Treasurys, said Thomas Simons, a money-market economist for Jefferies in New York. “As we’ve seen over the last couple of years, there’s been wavering confidence that demand will persist in the long run, causing the market to selloff.”

What’s going on now with the recent spike in yields, however, has “less to do with foreign investors selling Treasurys,” Simons said in a phone interview on Monday. “It’s more about a lot of uncertainty in risk markets and a demand for liquidity,” and market participants at some point “having to sell good assets after liquidating bad assets just to have cash.” While reduced demand for Treasurys by foreign investors “doesn’t help, it’s not the main driver,” he added.

On Monday, stocks DJIA SPX COMP closed mostly lower after failing to shake off a run of five straight weekly losses. U.S. crude-oil prices CL00 CL.1 CLK26 rose after President Donald Trump said he could “blow up” Iran’s power plants, oil wells and the Kharg Island oil-export hub if a deal isn’t reached shortly to end the war and reopen the Strait of Hormuz trade route.

Meanwhile, Treasurys sharply rallied on increasing worries about the economy, sending 2-year BX:TMUBMUSD02Y, 10- and 30-year yields down by between 7.7 basis points and 9.7 basis points each, based on 3 p.m. Eastern time levels from Dow Jones Market Data. Two- and 10-year yields had their biggest one-day declines since last August.

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