Market Journal: And The Penny Drops

Per usual, the reason for market behavior emerges after the move.

Discussion

As discussed earlier, the market is seeing a clear change in character with stocks and rates down in classic risk-off fashion. Many are explaining the change as due to a downshift in growth expectations, but now we know the real reason: Israel-Iran. Hence, the sticky move in IG CDX despite lower rates.

War is something that places markets outside the hands of policymakers, at least for a time. This risk must be monitored very closely.