Iran conflict latest: Trump pauses Iran energy plant strikes by 10 days
The conflict is escalating for now. It appears that Iran is not done fighting. They attacked ships on their way to the Strait of Hormuz last night. The oil reserves being released will take some time to get into refineries. The US Navy escorts for ships heading out of the Strait of Hormuz apparently won’t start until closer to the end of the month.
As long as the strait is closed, the pressure on oil prices and other petroleum-based commodities, such as fertilizer, will rise. Crude oil is trading at $95 and rising. Gasoline is up another 5.4% today, now up 53% in a month. It is a troubling situation with no easy answers if Iran doesn’t ask for a ceasefire.
Energy costs affect everyone. Stock indexes are down across the board by over 1% after the first hour of trading. The only sectors in the green are energy and utilities. Global equities are down 1.6%, and emerging markets are down 3%.
Interest rates continue to rise. The US 2-year is up 5bps to 3.68%, the highest since early August, the 10-year +2bps to 4.23%, breaking above 4.25% then pulling back. International yields are higher as well. This is counterintuitive to recession risks that higher energy prices may bring and reflects more of an inflation concern.
The pressure on private credit continues. Alternative asset managers, such as Apollo Group (APO), Ares Management (ARES), Blackstone (BX), and Carlyle Group (CG), are being sold wholesale, typical of credit concerns where they shoot first and ask questions later, due to limited liquidity. Blue Owl (OWL), the poster child, is now down over 40% YTD. No one exposed is immune; the biggest bank, JP Morgan (JPM), is now down 13% YTD.
In other commodities, precious metals are softer again, in part due to a stronger US dollar, helped by higher crude prices and higher US yields, which has taken the US dollar Index to 99.7, the highest since late November. One asset class that has shown little risk-off sentiment is crypto, with Bitcoin holding on to $69.6K, still up over 6% for the trailing month.
The world waits for a market-shifting Trump announcement. We’re seeing a geopolitical risk with teeth. The trend remains very volatile.