Markets:
- Gold up $12 to $2,390
- US 10-year yields down 8.8 basis points to 4.56%
- Nikkei down 2.3%
- CHF leads, AUD lags behind
- S&P 500 futures down 43 points
The Asia-Pacific session was awfully quiet until around 10 a.m. in Tokyo, when reports began to emerge of explosions in the Middle East. They first dispersed, citing Syria and Iraq, then Iran. Several targets were rumored and there was talk of various nuclear sites and the market decided to hide.
What was interesting was how slowly the news spread. We were writing about this and the markets moved for over an hour before it hit some mainstream media outlets. As the crisis affected larger and larger sources, the risk-on mood lessened. However, by the time it made the front page of “CNN Breaking News,” it was rock bottom.
At that point it became clear that this was a limited strike and appeared to be aimed at only one site, and perhaps calibrated to minimize casualties and damage, but also to send a signal. The second positive signal was when Iran started denying that any of this had ever happened and that the sounds were those of quadcopters being shot down by air defense.
I don’t even think the truth matters here, because the message is that Iran does not want further escalation.
The market was pretty quick to pick up on this — and I’m going to pump my own tires here — and we’ve already given most of the gains back into gold after hitting an all-time high of $2,417. It’s a similar story across the board, as more and more movements fade.
One could even argue that risky transactions should be higher than pre-attack levels, because there was always some change (and a good one) that Israel would make. something. Now that we have seen this and Iran’s comments, it is not far-fetched to assume that this chapter is closed. Of course, in the Middle East, it never takes long for a new chapter to open.
cnbctv18-forexlive
