2020 has started with a geopolitical « White Swan » (an understood risk that occurred unexpectedly) in the Middle East involving the US and Iran. Overnight the situation has escalated as Iran fired more than a dozen ballistic missiles on two bases in Iraq that house American Troops.
According to the New York Times, the Islamic Revolutionary Guards Corps said in a statement on a Telegram messaging app channel, “The fierce revenge by the Revolutionary Guards has begun.” The fluid crisis has understood implications for safe-haven commodities such as gold, oil, and currencies such as the JPY and CHF. Bitcoin (BitfinexUSD) has now joined the select group of assets that exhibited safe haven characteristics (sort of). While U.S treasury yields slide and stocks have declined the overall responses have been limited (considering the potential threat).
In a strange logic, estimates suggest that a sustained $10/bl increase in oil prices would decrease global growth by 0.15%, which would, in turn, increase the probability of ease from central banks. And in our view it's monetary policy support that is keeping stocks higher.
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