Sticky forecasts?
One theme from the early days of this conflict in the Middle East was complacent pricing. Markets still saw the knee-jerk reaction of a flight to safety and a rotation away from risk, but it was on a small scale. Markets didn’t crash per se, they slumped. Even energy markets, which have arguably most obviously tracked the evolving state of the conflict, were complacent. Sure, front-month contracts rose but the rest of the curve was very sticky effectively thereby implying a very short conflict indeed. Looking at the price of those front month contracts with the beauty of hindsight: markets at first were pricing a war with limited economic disruption also.
As the conflict has dragged on and appears to continue to do so at least for now, some of that complacent pricing has been corrected. Equities still seem incredibly content with the risk despite the threat to global growth via the mechanism of constrained consumer demand. However, oil is now seemingly well anchored above $100pbl with the rest of the curve falling closer behind. The Dollar retains its bid with emerging market currencies, at least those with significant energy import dependencies, having now corrected slightly lower. So, that’s short-term pricing moving in a more sensible direction, but what about the forecasts?
Forecasts will always move slower than market pricing. Price discovery will occur from shifting supply and demand for an asset from speculative and real flows. Forecasts take time and due process to publish, so there’s an obvious lag but here’s the catch: those forecasts being published after the recent spike in geopolitical risk continue to bear great resemblance to market pricing pre-US/Israeli military intervention in Iran. That’s not necessarily a problem but it does suggest analysts see this conflict giving way to fundamental price trends present from before this conflict.
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Missing haven
Charles Porter
Tue 7 Apr 2026
Missing haven At the start of the year, the Franc had performed well as a safehaven. As a result of political and economic developments in Japan, the Yen was not abiding by its usual safehaven form. Therefore, defensive plays within FX only had two credible places to go: the US Dollar or the Swiss Franc. […]
Daily Brief – Battle of the banks
Charles Porter
Thu 2 Apr 2026
Battle of the banks Market volatility continues amidst unclear messaging from both sides of the conflict in Iran. The President’s position has continued to flit between seemingly concrete positions of absolutely tangible progress and bombing the nation back ‘to the Stone Ages’. Since the start of the war, smarter money has acknowledged that predicting the […]
Daily Brief – Questioning Truth
Charles Porter
Tue 24 Mar 2026
Questioning Truth Adopting the same handle as his now rather redundant X account, @realDonaldTrump shocked markets yesterday using his own social media platform, Truth Social. During Trump 1.0, the legitimacy of a President using an unofficial X, then Twitter, account was questioned. Now under Trump 2.0, it’s seldom questioned when he is the majority shareholder […]
