In we look back to April of last year, Israel struck the Iranian consulate in Syria. That triggered a stock market decline of about 7% over the next 18 days, on the prospects of global war.
Gold went up 8% during the period. Silver went up 20%.
But oil went up just five bucks from $82 to $87. And while U.S. Treasuries are safe haven assets in times of risk aversion, the 10-year was sold, not bought (price down/yield up). The 10-year yield ran UP 50 basis points (to 4.70%).
This reaction all reversed after Israel de-escalated — ending tit-for-tat attacks.
Fast forward 14 months, and (as of tonight) we now have the response from Israel that the markets were bracing for a year ago. Iran has warned this will engulf the region in war and drag U.S. forces into the line of fire.
So, the first moves: stocks down, gold up.
Oil, this time, is up big — +11%– though starting from a much lower base (high $60s vs. $80s last year).
And the first move in yields was down, but now ticking up. Will we see another run UP in yields, on the prospects of inflationary outcomes: an oil price shock and potentially a government spending response?
