U.S.-Iran tensions escalate again

On the news front, explosions were reported in multiple areas in southern Iran, and the U.S. military said it has begun strikes on Iran-related targets

Affected by this, oil prices surged rapidly, gold pulled back to below $4,100, and “the big pie” followed lower as well

If the conflict continues to escalate and oil prices keep moving higher, the market may experience:

1. Inflationary pressure returning
2. The U.S. dollar and U.S. Treasury yields strengthening
3. Risk assets falling

Next, watch two key signals

1. Whether oil prices can continue to surge
2. Whether the U.S. and Iran continue to expand their actions

If it’s only a one-off strike, the market may digest it quickly

If the Strait of Hormuz, oil tanker transport, or Iranian energy facilities continue to have issues, the market may face a second round of declines
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