Dilution of War Related Risk Provides Give-me Trades

The Market Is Starting to Price Normalisation

The market has made a meaningful shift.

A few days ago, the dominant question was how much inflation risk the Middle East shock would push back into the system. Today, the balance of risks looks different. The Strait of Hormuz has been reopened to commercial traffic for the duration of the ceasefire, a 10-day Lebanon-Israel truce is in effect, oil has dropped back below $85 the dollar is softer, Treasury yields have shifted lower, and equities are again trading as though the old leadership regime has room to run.