Good morning,
Investors begin this month — and this week — with a deep breath as they attempt to assess “Epic Fury” and its potential market consequences.
Near-term fact pattern:
- The U.S. has chosen to pursue regime change rather than a more limited, targeted strike approach.
- Iran’s initial retaliation has been regionally broad, though early reports suggest limited material damage.
- Shipping through the Strait of Hormuz appears temporarily disrupted, though the duration remains unclear.
Market reaction so far has been measured. European equities are down roughly 2.5% on average. U.S. futures are off about 1% by comparison. There has been little traditional “flight to safety” bid in Treasuries. Instead, bond traders appear more focused on the potential inflationary impulse from crude oil, which itself has not made an outsized move — at least not yet. The dollar and gold are higher, but not dramatically so.
The White House has offered varying duration estimates in media interviews, with headlines coalescing around a 4–5 week window. Markets, however, have become conditioned to discount early official timelines from this White House. That may help explain the relatively restrained initial response.
Macro data will likely move to page two this week. February employment on Friday will be the primary economic release of note, alongside a heavy slate of retail earnings.
We will learn more as the week unfolds.
See you Friday — and hopefully under calmer conditions.
Be well,
Mike