It appears that there is no market panic today on the uncertainty of the Iran situation, despite oil and interest rates grinding higher. Stocks are down but only modestly. The traded as high as 27.9 and after the first hour pulled back to 26.6. Perhaps after nearly a month of living with elevated energy prices, investors are ready to shop for bargains in the longer-term horizon.
The problem is that the longer missiles fly, the longer it will take to get back to normal in the energy market due to damaged infrastructure. Outside of the COVID pandemic, almost all global recessions were preceded by a spike in energy prices. And this time around, global debt levels are much higher as a percent of .
At the same time, earnings estimates are not being cut, I still forecast the U.S. GDP to grow 5% in 2026, unemployment remains low, and AI is expected to grow efficiency for years to come. It all comes down to your investment horizon. The market reaction to Trump’s announcement yesterday made clear that investors are ready to buy the dip when the smoke clears.
Interest rates are up today. The U.S. 2-year is up 7bps to 3.90%, up 51bps since the Iran fight began. The 10-year is up 4bps to 4.37%, up 45bps. International yields remain relatively flat today. The US dollar index is up 0.4 to 99.2.
WTI crude is up 3.7% to $91.38/bbl, Brent is up 3% to $98.80. Gasoline is up 3.3% to $30.7/gal, now down 1% for the trailing week, up 37.3% for the month. is flat for the day and flat for the month. Dutch natural gas is down 5.6% on the day, +75.9% for the month. Europe is being hit much harder by the energy price spike than the self-sufficient/ exporting U.S.
The market remains volatile, but we seem to have reached a correction where investors are willing to start buying the dip.