Volatility in full force

As we enter the third week of the conflict in Iran, yesterday was a clear example of the ripple effects and the interconnection of markets. On the top chart you can see the real estate index in Dubai, 60% lower since the start of the war. On top of that, as bombing intensifies, people took their deposits out of banks creating a bank run, which forced (allegedly) the Central bank to sell its gold reserves to defend the currency and support local banks, causing a 10% drawdown in an asset that is perceived as the ultimate safe haven. But liquidity and bank runs, forced its hand . Due to that pressure and dislocation, yesterday around 2 pm, the U.S. Treasury secretary announced the US would lift sanctions on Russian oil, and on the Iranian oil that’s on ships in the water. Crude Oil sank, and precious metals rebounded. Today looks like another volatile session as we wait to see if the U.S. and Israel will attack Iran again. U.S. treasury yields are up, as they sense there will be no rate cuts on the back of inflationary pressures. The dollar index weakened, but remain volatile as investors decide what is a safe haven and what is not.

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