In response to the joint US and Israeli attack on Iran, financial markets have so far reacted in a relatively orderly and measured way. Risk, as measured by volatility, has increased across asset classes. However, we have not seen dramatic dislocations in core financial markets, rates, credit, and foreign exchange. Energy markets, however, have reacted more strongly. Natural gas prices have spiked, reflecting the physical disruption and impairment of certain Gulf-based processing facilities. Oil prices briefly crossed the psychological threshold of one hundred dollars per barrel, while shipping in and out of the Strait of Hormuz slowed dramatically. Monday’s comments by President Donald Trump suggesting that the conflict may be nearing an endpoint subsequently brought oil prices back near ninety dollars per barrel, underscoring how sensitive energy markets are to perceptions about […]