The Iran conflict isn't panicking investors - yet. That's about to change.
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The Iran conflict has not yet caused significant panic among investors, but this calm may soon change as energy supply shortages in Europe and Asia grow more acute. Despite the disruption to global energy trade, financial markets have held up reasonably well, with the S&P 500 avoiding a correction and credit spreads remaining relatively tame.
The Iran conflict has not significantly impacted investors, with the S&P 500 avoiding a correction and credit spreads remaining stable. However, this calm may soon change as energy supply shortages worsen. US stocks have been stuck in a steady decline since the conflict began in late February. Corporate credit spreads have remained relatively tame, and market-based gauges of investors' long-term inflation expectations point to a modest pickup in price pressures. Energy supply shortages in Europe and Asia are expected to grow more acute in the coming weeks. Even if a deal is reached to de-escalate the conflict, oil prices may not immediately revert lower.
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