The extension confirms pressure on all parties to find an off-ramp, focused on restoring energy supply through the Strait of Hormuz due to US midterm election concerns (S&P 500, oil, gas prices).

We know the market playbook for de-escalation (weak dollar, positive EM/Japan, taking out rate cuts), but no clarity on oil price path.

$200 oil would mean recession, which is why there's such focus on finding an off-ramp. Base case is energy supply in four weeks above today's level.

Pressure from Asia (China, India, Pakistan) on Iran over next 10 days could lead to some trickle of oil supply.

Focus is on oil flow, not troop presence. Base case is partial de-escalation, some supply resumption, but oil prices still embed higher risk premium. Full, quick return of oil is about release of energy.

Not making major changes yet. Key unknown is government response to shield consumers/corporates (as seen in Japan, Italy). If repeated, corporate sector/earnings outlook more resilient.

UK has less fiscal space.

Much less convinced. Bond market listening to hawkish tone but perhaps translating too much of that language into intended action. Must also think about later pressure on growth.

Fiscal stimulus seems priced in by bond markets, maybe too much.

Reaction reflects pressure on all sides to find de-escalation. Equity markets are not pricing multiple quarters of significant supply disruption.