Markets Watchful as Mideast Heat Intensifies

The temperature is rapidly rising in the Middle East

Highlights

• The temperature is rapidly rising in the Middle East

• Stocks and bonds broadly in the red, but no sign of panic

• Swiss franc maintains strength even after the SNB cuts rates to 0%

• Chinese officials envision multiple reserve currencies in world trade

Key Takeaways

• Markets Calmly Focus on Economic Risks as the War Heats Up: Tensions in the Middle East escalated overnight to its most severe level yet. Israel launched heavy strikes, including a direct hit on an inactive Iranian nuclear reactor, while Iran responded with another wave of missile attacks. The prospect of direct U.S. military involvement is now looking increasingly likely, with reports from Bloomberg and the WSJ crossing the wire about strike plan approvals. Markets are weighing two starkly different paths: a swift and forceful intervention that might bring Iran to the table in a desperate search for diplomacy, or a scenario where the conflict spreads rapidly across the region.