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Risk off after the escalation in the Middle East, markets are recovering in a period of calm

In a dramatic turn of events this morning, Iran fired 15 ballistic missiles, 11 of which successfully hit several US bases in Iraq. 4 burned in the air. There is still no definitive report on the casualties, casualties and injuries, both from the US and Iraq.

Trump did not respond directly to the situation, did not give a briefing, and after a brief meeting with his team, he tweeted that “everything is fine”, saying he would give a press conference later in the day.

We are watching risk off sentiment, with the market this time feeling the cool reality that could have changed in a war between three or more countries. Futures in Europe and the US are down by between 1, 2 and 3%, with cash flows quickly “finding a way out” of the brief panic situation that ensues.

However, the money immediately found its way into the Japanese yen, Swiss franc, gold and oil, balancing the situation at this stage. The risk equalizes as risky assets begin to regain their lost positions and defensive ones to win. I have little data in the economic calendar today, but the markets will be entirely focused on the situation in the Middle East, which is far from over.

Today, until the emergence of a new catalyst, I expect cash to remain on hold, with markets making minimal movements. The surprise event has already been assessed at this stage, but the assessment of the future serious risks and what will be the response of the United States and, accordingly, of Iran’s counter-reaction to the rhetoric and actions of the United States are yet to come.

Iran and the United States have been contacting through their Swiss counterparts in the diplomatic corps, with correspondence beginning hours ago to find a way out of the situation.

Now the following is happening: The US killed a senior Iranian military, and Iran responded with revenge for its killing, showing that they had the capabilities. The bills should have been cleared, but that does not mean that there is no answer in time to continue.

Trade carefully and under increased scrutiny. Cash flows will immediately divert to the yen, gold, oil, franc at the time of escalation and will escape stocks and risky assets.


 Trader Milko Zashev


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