Markets Are Pricing in Little Risk of War With Iran - Bloomberg:
The weekend began with explosions in Saudi Arabia and ended with an almighty bang in the oil market, as crude futures briefly rose almost 20%. In the 24 hours that followed, markets moved in the expected direction. Bonds rose, stocks fell, and investors took more risk-averse positions.
But why wasn’t the move bigger? September has so far seen a classic market reversal, as stocks beat bonds, the yield curve moved out of inversion, and previously over-popular low-risk stocks were dumped. In other words, there has been a shift toward optimism. Yet after the biggest-ever interruption to daily oil supply, the turnaround has been minimal.
As this chart shows, bonds barely beat stocks, and the yield curve barely flattened. Were traders even paying attention?
The weekend began with explosions in Saudi Arabia and ended with an almighty bang in the oil market, as crude futures briefly rose almost 20%. In the 24 hours that followed, markets moved in the expected direction. Bonds rose, stocks fell, and investors took more risk-averse positions.
But why wasn’t the move bigger? September has so far seen a classic market reversal, as stocks beat bonds, the yield curve moved out of inversion, and previously over-popular low-risk stocks were dumped. In other words, there has been a shift toward optimism. Yet after the biggest-ever interruption to daily oil supply, the turnaround has been minimal.
As this chart shows, bonds barely beat stocks, and the yield curve barely flattened. Were traders even paying attention?
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