{"id":8791,"date":"2020-01-03T18:44:09","date_gmt":"2020-01-03T18:44:09","guid":{"rendered":"https:\/\/intelliloan.com\/blog\/?p=8791"},"modified":"2024-10-16T18:57:17","modified_gmt":"2024-10-16T18:57:17","slug":"us-airstrikes-spike-market-volatility","status":"publish","type":"post","link":"https:\/\/intelliloan.com\/insights\/us-airstrikes-spike-market-volatility\/","title":{"rendered":"US Airstrikes Spike Market Volatility"},"content":{"rendered":"

By now, you know the US attacked and killed one of Iran\u2019s top generals and sent global markets reeling<\/strong>\u00a0in response to the threat of an \u201cimminent attack.\u201d Qassem Soleimani, who led proxy militias that extended Iran\u2019s power across the Middle East, was killed in a strike in Baghdad authorized by President Trump. \u201cWe don\u2019t seek war with Iran,\u201d Sec of State Pompeo said in an interview on Fox Friday morning. \u201cBut we, at the same time, are not going to stand by and watch the Iranians escalate and continue to put American lives at risk without responding in a way that disrupts, defends, deters and creates an opportunity to de-escalate the situation.\u201d\u2026 \u201cGeneral Soleimani was actively developing plans to attack American diplomats and service members in Iraq and throughout the region.\u201d The financial markets reacted as we would expect; on the initial reaction, the DJIA dropped over 300 points in the futures markets, the 10 yr note dropped from 1.88% yesterday to 1.80%.<\/p>\n

The killing of Soleimani will likely cause retaliation from Iran<\/strong>. The Supreme Leader Ayatollah Ali Khamenei is due to attend an emergency meeting of Iran\u2019s Supreme National Security Council for the first time, the state-owned Hamshahri newspaper reported. He vowed to avenge Soleimani\u2019s killing. Iran has been baiting the US for the last year, today Iran has to deal with the increasing reality that the US won\u2019t sit still any longer. The chances of an escalation of tensions are very high now; Iran\u2019s leaders can\u2019t let this go without some serious response.<\/p>\n

Stocks and global outlooks were increasingly positive about 2020.<\/strong>\u00a0Investors continued buying even in an extremely overbought equity markets. Now we wait to see what Iran will do. The administration is signaling that the US is no longer going to tolerate Iran\u2019s continual pricking the situation with their constant surrogate attacks across the mid-east.<\/p>\n

By 9:00 am ET\u00a0<\/strong>some retreat, the DJIA -248, the 10 yr at 1.83%. MBS prices a little better at 9:00 am EST +8 bps from yesterday\u2019s close. This is all safety reaction, and although MBSs will follow, demand is for treasuries, not MBSs.<\/p>\n

At 10:00 am EST<\/strong>\u00a0Dec ISM manufacturing index expected at 49.1 from 48.1, the index dropped to 47.2; the reaction sent MBS prices from +9 bp to +17 bps. Nov construction spending increased 0.6% on estimates of +0.4%.<\/p>\n

At 2:00 pm EST,<\/strong>\u00a0the minutes from the Dec FOMC meeting will be released.<\/p>\n

Already this morning, the volatility in the equity markets is high, and we expect that will continue through most of the day.<\/strong>\u00a0The Iran issue is not to be dismissed easily, but investors remain with an insatiable appetite for stocks. Ten minutes after the DJIA opened -320, it was down just 215 points. It appears big money and investors are not as fearful about the escalation with Iran and how it is going to play out. The initial reaction looks mild, given the overbought equity markets and the response to the news this morning.<\/p>\n

Source: TBWS<\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

By now, you know the US attacked and killed one of Iran\u2019s top generals and sent global markets reeling\u00a0in response to the threat of an \u201cimminent attack.\u201d Qassem Soleimani, who led proxy militias that extended Iran\u2019s power across the Middle East, was killed in a strike in Baghdad authorized by President Trump. \u201cWe don\u2019t seek […]<\/p>\n","protected":false},"author":2,"featured_media":116,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-8791","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-intelliloan"],"_links":{"self":[{"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/posts\/8791","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/comments?post=8791"}],"version-history":[{"count":1,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/posts\/8791\/revisions"}],"predecessor-version":[{"id":9007,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/posts\/8791\/revisions\/9007"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/media\/116"}],"wp:attachment":[{"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/media?parent=8791"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/categories?post=8791"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/intelliloan.com\/insights\/wp-json\/wp\/v2\/tags?post=8791"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}