Concern that despite US assurances, oil tankers are taking longer routes due to Strait of Hormuz risk.
Francine Lacqua
John Bilton
Markets are behaving rationally. Brent front contract up ~15%, but Dec 2026 contract only up 2-3%. Strategic petroleum reserves provide buffer against immediate inflation panic.
Given the intensity of attacks and protracted conflict, are markets overreacting?
Francine Lacqua
John Bilton
Markets are not overreacting; they are rationally repricing oil and delaying rate cut expectations. Underlying economic stories (chip demand) remain intact, creating volatility but sensible reaction.
What does conflict mean for bonds and dollar?
Francine Lacqua
John Bilton
Dollar likely weakens long-term (admin wants it down), but acts as safe haven during hot conflict, providing near-term support. Euro-dollar range 1.16-1.20s, long-term target ~1.26.
When do we worry about inflation? How long until inflation expectations change?
Francine Lacqua
John Bilton
10% oil price move ? ~30bps headline CPI, 5-10bps core CPI, with 6-9 month lag for pass-through.