Growth Over Fear

This morning’s price action is telling a fairly constructive story.

We are not looking at a straight line back to normal through Hormuz, and we are not looking at a market that believes every geopolitical risk has vanished. But equities are well bid, the index is pressing back toward all-time highs, credit remains tight, and the dollar is softer. That is not the behavior of a market preparing for a meaningful demand accident. It is the behavior of a market that is increasingly willing to look through the immediate shock and focus on the bigger point: growth is holding up, earnings are holding up, and the system still looks capable of absorbing the cost pressure.

That matters.

The market is not saying the disruption was irrelevant. It is saying that, so far, the disruption looks more like a cost shock that can be managed than a shock severe enough to derail demand, shut the refinancing window, or force a genuine recession reprice. That is why I still think the right macro stance is long equities, steeper bond curves, and a flatter short-end curve in STIR.