Wall Street Turns to ‘Haven-First’ Strategy Amid Iran Crisis

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• 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

  80% confidence

• 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

  80% confidence

• Investors have grown accustomed to geopolitical flare-ups that fade fast, but this episode risks lasting longer

  80% confidence

• Traders will be adopting the strategy of 'haven first, ask questions later'

  80% confidence

• The extent of the de-risking is anyone's guess

  80% confidence

• Our constructive outlook for the year stands, but these events reinforce the reality of a fragmenting global order. Portfolios should be built for resilience—with both gold and exposure to sectors governments consider strategically vital

  80% confidence

• Rich valuations across global equities and credit make it easier for investors to trim risk

  80% confidence

• If Middle East conflict sends oil prices higher on a sustained basis, there could be a near-term inflationary scare that spooks the equity market

  80% confidence

• Investors need to continue to think about the distinction between front-page risk and bottom-line risk. If this conflict has no meaningful downstream impacts on growth or earnings, any negative stock market response has the potential to be short-lived

  80% confidence

• This operation in Iran does not change US fundamentals

  80% confidence

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

  80% confidence

• If the impact on oil remains limited, I would rather see any bigger dip as a long term buying opportunity

  80% confidence

• The risk-reward doesn't seem compelling. 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

  80% confidence

• This Iran strike constitutes an almost perfect selloff catalyst for an already fragile equity market, and the recent uptick in volatility is likely to extend in the shorter term

  80% confidence

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

  80% confidence

• In the short-term, we can expect a spike in oil price (5% to 10%), lower US rates, gold up and equities down a little (around 1%)

  80% confidence

• I'd expect yields down 5 to 10 basis points at a minimum on the initial move

  80% confidence

• Consumer discretionary stocks will be losers because of higher oil prices, which will hurt airlines and retailers

  80% confidence

• 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

  80% confidence

• There is a high probability that Asia, and onward to Europe and the US will experience a risk-off gap down

  80% confidence

• This is about Hormuz risk, not retaliation. If shipping stays open, stocks can work through it. If it doesn't, all bets are off

  80% confidence

• 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

  80% confidence

• 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

  80% confidence

• The scale of the attacks and Iranian retaliation is larger than what the market expected

  80% confidence

• 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

  80% confidence

• The military operation with Iran could last for a few weeks. We don't believe it drags on

  80% confidence

• Treasuries are likely to extend moves from Friday when short-term yields sank to levels last seen in 2022

  80% confidence

• 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

  80% confidence

• The curve could steepen aggressively as the market starts pricing out Fed cuts and breakevens blow wider

  80% confidence

• 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

  80% confidence