Gold, oil, the dollar, and stocks acted as expected to the war in Israel. The bond market is closed along with banks. Monday is Columbus Day/Indigenous Peoples Day. 
Oil Soars Amid Middle East Conflict, Gold Gains
Bloomberg reports Oil Soars Amid Middle East Conflict, Gold Gains
West Texas Intermediate climbed above $86 a barrel while Brent touched $89 as traders braced for a wider conflict after the US said it was sending warships to the region. The Wall Street Journal reported that Iranian security officials helped Hamas plan its attack on Israel, which risks triggering a retaliation against Tehran.
The greenback gained versus the euro and pound, while riskier currencies slipped. The yen — another favored refuge for investors — strengthened. Meanwhile, Australian and New Zealand bonds reversed early declines and US stock futures dropped.
“The events over the weekend obviously destabilizes the region; investors have a lot to mull over,” said Kyle Rodda, senior market analyst at Capital.com. “Ultimately, these events tend to have only a short-term impact on financial markets, and it’s probable that this time will be the same.
The fallout from the Israel attacks reverberated through Middle East markets on Sunday, sending stocks sliding. Major equities gauges in the region fell, led by a drop on Israel’s benchmark TA-35 stock index, which posted its biggest loss in more than three years, sliding 6.5%.
“Any extension of this to oil-producing countries, Saudi Arabia in the lead, could make the price of crude oil more expensive, with negative inflationary effects for the West and would mean higher rates for longer,” said Guillermo Santos, head of strategy at Spanish private banking firm iCapital.
U.S. stock futures tumble, oil prices surge as Hamas attack on Israel rattles investors
MarketWatch reports U.S. stock futures tumble, oil prices surge as Hamas attack on Israel rattles investors
U.S. stock-index futures fell and oil prices jumped late Sunday, as investors were rattled by geopolitical uncertainty after Hamas launched a surprise weekend attack on Israel.
Dow Jones Industrial Average futures (YM00) fell about 200 points, or 0.7%, right out of the gate, while S&P 500 futures (ES00) and Nasdaq-100 futures (NQ00) sank as well. Traditional havens such as gold (GC00) and the U.S. dollar DXY rose.
Meanwhile, oil futures (CL00) surged late Sunday. Analysts said crude prices could rise in the short term due to possible knock-on effects on Iranian oil exports.
I expected treasury yields would head lower but we have another day to wait.
The CPI report is on Thursday. All eyes will be watching.
Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter
On September 13, I reported Consumer Price Inflation Jumps 0.6 Percent Led by Energy and Shelter
The price of rent has gone up at least 0.4 percent for 25 consecutive months!
Do we break the string?
There’s never going to be peace between Israel and the Arabs. I think we should just let them battle it out. That’s what both sides want. But, both sides have to live with the consequences. If Israel takes over Gaza and the west bank and maybe part of Lebanon, and kicks the Arabs out, so be it. Likewise if the Arabs take over part or all of Israel, they get to keep it and the Jews need to find a new homeland.
Gaza new leaders might cut their losses, recognize Israel. They hate Jews, so do
the Irish and the Scot.
I agree that the Jews need to either find a new homeland, coexist in a fair and just arrangement with Palestinians, or just be scattered throughout the world as they were.
But, as it is, the reality of overwhelming Israeli force would guarantee the extermination of their (justified) enemy. That is, of course what they want. The world needs to prevent the ever-increasing Israeli expansion and demand peaceful coexistence.
Takes both sides to get a peaceful coexistence. The problem is that once blood is shed, its very hard to get peaceful coexistence because any bad feelings on how it ends (ie one side doesn’t feel everything was equal) just causes it to flare up again in the future.
The irony is that the extermination of their enemy that you mentioned would indeed solve the problem once and for all. Of course it’s doubtful the world (rest of the Arab and Muslim countries) would sit by and watch that happen so it would escalate into a larger conflict.
‘The irony is that the extermination of their enemy that you mentioned would indeed solve the problem once and for all.’
I suppose that the same may have been said about Jews in the Nazi era.
People seem awfully outraged about that.
Why should opinion of the rest of the (non- Muslim) world watch this continuing extermination happen?
There will never be peaceful coexistence because too much blood has been shed by both sides. Look at 9/11 in America. It’s more than 20 years now and lots of people here are still outraged at Saudi Arabia for their involvement.
So only 2 things can happen.
1) Both sides continue to attack each other periodically forever.
2) One side totally wipes out the other one.
In old times (ie pre 1800) option 2 was mostly chosen to prevent ones enemies from coming back (typically all males were killed and the women were given to soldiers so that the old population was bred out) in the future. In modern times, option 2 is no longer considered civilized so option 1 is what we get forever.
“Look at 9/11. It’s more than 20 years now and lots of people are still outraged at Saudi Arabia for their involvement.”
They would be more justified to be outraged at Israel for their involvement.
So, Israel’s highly vaunted intel fails to detect the surprise Hamas raid, but the WSJ is able to determine that Iran helped plan the operation in a day! Yeah, sure.
I am convinced that every time I am convinced I have been further convinced that I was wrong.
1) US industrial output might rise. The soft clogs of US gov debt might be
removed. Beit Hanun might be erased. Israel will hunt Hamas leaders. Snakes
eating snakes.
2) After death from starvation and destruction moderate leaders will rule Hamas and Fatah. They might accept reality, accept Israel.
3) Today’s “event” might lead to open borders, to a “United Holy land”, a new country,
a new pathway, like Scotland and England. After a decades of bloodshed the ME might flourish.
4) Iran is a loser. MBS might construct a R/R to Haifa.
Death from starvation and other gruesome means only creates new hard core supporters, not more moderate leaders.
The only way to get to what you describe would be to literally wipe out the population of the entire region so that there were no future supporters at all. Of course the world would not look on while that occurred so expect this problem to rear it’s head again in the future (years or decades).
It looks like a lot of international and institutional investors are bugging out of lower rated US bonds for better rates in securities in other jurisdictions.
Which do you think is the best cure for rising bond yields (and thus interest rates) in the USA, to prompt a rush back to bond/treasury purchases?
1. a major bank implosion?
2. a -30% to -60% stock market crash?
If growth is tanking, who would rush into mortgage-backed securities? Presumably the US government and Federal Reserve has got the message that endlessly creating debt for foreign policy and ideological goals is flooding the bond market and driving up interest rates at home… or maybe that sort of thing doesn’t penetrate the neo-Maoist red mist surrounding the demagogues, their miltary-industrial complex, and their wokefascist culturati minions?
Prediction: stocks, gold, treasuries lower. Oil, rent and interest rates higher.
Stocks lower, yes… but gold is looking pretty resilient to the rising dollar… probably because of its popularity in the Asian continent, which is where all the oil profits are.
Interest rates going higher is contingent on that money having elsewhere to go.
Gold only does worse than stocks most of the time.
It is strange that the fate of Palestinians has interested a lot of people, especially on the left, but other similar cases, sometimes much more serious, arouse much less reaction. For example what happened to the Greeks who inhabited a significant part of Turkey, and were expelled, the Cypriots in northern Cyprus, and of course the Armenians, who have seen one half of their country stolen.
…Armenians too, their plight is similarly serious, what with not just real genocide, but cultural extermination too… removal of churches, as well as hideous crimes against Armenian women by Turkish-backed jihadis in Azerbaijan.
The obvious reason for Palestine being prioritised is because of the US fixation on the biblical homeland, and the implicit pact with the Israelis to keep it Christian-friendly, which might not be the case were it all controlled by muslims. Blame Balfour…
Biblical homeland has nothing (or very little) to do with it.
It’s all about having friendly country there (Israel) in the middle of one of the most important regions on earth (oil). If there was no oil in the middle east the US would not care at all what happened to any of those countries.
Oil and gold gapped but probably won’t hold. Russia would love to have turmoil in the Middle East as it would raise the price of oil and if supplies were cut might cause Europe to make peace with them. Anything that causes confusion and problems for Europe is good for Russia so they will do all possible to make it happen. It’s the Russian pipe dream.
Didn’t Biden Inc. just free up roughly $6B Cash to his friends in Iran? Didn’t also, but not as recently, Biden Inc. leave behind $B in Military Technology and Weaponry in the Middle East?
Just a fleeting thought, but if Biden Inc. didn’t just keep giving Our/Israel Enemies in the Middle East $ and Weapons, then maybe they wouldn’t have so much $ and so many Weapons to utilize in wars against Israel and the U.S. (no worries Any Of This is heading across our border each and everyday that goes by).
JS…
Hmm… add-on thought. Maybe this is what keeps our Military Industrial Complex so alive and well. You must have an Enemy that has $ and Resources to stay actively engaged. So we send $B to the Middle East to keep that skirmish going endlessly, and we also send $B to Ukraine to keep that skirmish going endlessly.
So all is right and normal in the World I suppose. America is in a recession Again, and also various skirmishes around the Globe Again. There is turmoil in the Middle East Again. China is playing War Games Again, and looking to take over Africa Again. Russia is in another (U.S. led) conflict Again.
In fact the ONLY difference this time, then over the last Few Decades, is the U.S. Border is Wide Open. This should assure the U.S. will be involved in many more Domestic Conflicts (self inflicted) over the next decade, and that will lead to more International Conflicts, based upon whom we wish to blame (i.e. have another conflict with) and go after (wink,wink) from our very own self inflicted set up for more Conflicts.
I think I am starting to get it…
Initial reaction might be a flight to quality eg Treasuries but longer term this is inflationary and therefore higher rates for longer or hikes, which is not good for Treasuries.
Shorter term treasuries then.
Very good lol
Were you expecting something less obvious for those fleeing risk? Make a silly statement, get a silly reply 🙂
Yeah but I was really referring to yields initially dropping across the curve, not just the very short end, but I obviously didn’t make myself clear.
Hamas earthquake may have caused a tsunami of death from dehydration,
starvation and infection diseases. The long term implications are bad.
Gaza ==> Ghetto Varsha.
None of these numbers mean anything in the grand scheme of things. The amount of people suffering in the Middle East is astounding. 2 million people are packed into Gaza which has an area equivalent to 11 miles by 11 miles with no escape. This is intolerable, how can it be endured. An important perspective is missing in both Gaza and Israel.
https://www.youtube.com/watch?v=m4Nx8W5T-GI&t=5s
Nearly as much as SE England, which is already being inundated by illegal immigrants and transformed into the developing world police state that all of these creatures supposedly fled from. It’s one way to create Airstrip One, but is it the best way?
I watched an Israeli official on the news today. He made the absurd claim that 900 Israelis dying was equivalent to 40k US citizens dying because the US has 40x the population of Israel. It was 10 911s.
I’m calling it here. Mark this as the unofficial start of WWIII. On one side – Iran, Russia and China and terrorist groups like Hamas, Hezbollah, ISIS and Al-Qaeda. On the other, the EU, US, UK, Australia, Japan, India, Canada, Israel and Saudi Arabia. Iran wanted no Saudi-Israeli peace plan and helped Hamas and Hezbollah with this attack. . Russia and China know the US cannot fight multiple wars at the same time and have had cozy relationships with Iran in recent years. I expect a blockade of Taiwan sometime in the near future as things spiral downward over the coming months. I expect Iran and Israel to have a nuclear war soon and things won’t ever be the same in the middle east or world again. Iran has been waiting for this for decades and is ready and thus helped attack Israel. Make no mistake. This wasn’t just some garden variety attack in Israel.
You are way over-hyping this.
One person on last post called it a big nothing.
Forced between big nothing and WWIII, big nothing easily wins.
Since the “middle” is about 99% I will go with something else.
This has a potential to escalate but not to WWIII
I agree with you that something might happen or something might not.
Yes, I am placing bets with Half of my friends with $1,000 each that WWIII has begun and the other half: $1,000 each that WWIII is not happening.
Doug, so ,,,prophetic.
troll.
I might agree with this WWiii thesis if we had a more spastic, angry knee-jerk president.
In16 hours or so, we’ll be hearing how soft Biden is on foreign policy.
.
If only the facts matched your imagination… whilst you might despise Trump, the evidence is for a lack of actual war and reversal of conflicts, which appears to be off-message for deep-state democrat deviant warmongers.
Any student of history knows that one war breaking out encourages other wars also to break out. Whether it will go as far as you say no one knows. My view is that Israel can handle this locally. The brutality of the attackers is that we have seen done by ISIS and we know how that ended. It is unlikely that this will result in a generalized war in the Middle East. Iran was definitely directly involved. Russia maybe is or maybe not but since Iran is its closest ally it is guilty by association. In any case here in Europe we are seeing a sea change in attitudes. They have woken up to the fact that they are attacked from the East and the South now and that peace is just a memory.
Students of history also may observe that most wars have a large economics and resources / supply chain component… and it doesn’t matter how big your weapon is if you can’t feed it fuel and ammo, and if you can’t feed the weapon operators.
Guerilla warfare is a bit different, and perhaps more cost-effective if your objective is to justify the existence and persistence of a lot of military and intelligence infrastructure to your taxpayers via your bought-and-paid-for media and bigtech.
Russia is guilty because they don’t hate Iran? You have a serious case of Putin derangement syndrome.
Russia is also allied with Israel.
You need to brush up on your facts, Mr. Armchair general. You realize Iran & ISIS are sworn enemies, whereas strangely ISIS and Israel has a sort of understanding and never bothered each other? Also, Russia and Israel while cold now have a generally cozy relationship, and China is about as committed to any cause as a merchant is to selling their discount products.
No one likes ISIS and especially not the Arabs. If Hamas looks like it is going full ISIS then Arab countries would join in to crush it.
To most of us, it’s like lifting up a stone and describing all the creepy crawlies, and trying to make a big deal out saying centipedes are the same as cockroaches, worms, lice, and spiders… to most of us, they are all repulsive.
The US seems to like ISIS. We trained and armed them for years hoping they would overthrow Assad. Clearly without thinking through what would happen afterwards.
“If Hamas looks like it is going full ISIS ..”
But they’re not. They haven’t changed at all. Still just fighting a specific occupation. Not at all trying to establish some crazy Caliphate none of them have any interest in actually running, once it’s been established.
The only thing somewhat surprising, is how effective Hamas seem to have gotten, given their massively weaker hand. Somewhat similar to how the Ukranian resistance no doubt surprised the, on paper, vastly stronger Russians.
It probably shouldn’t be that surprising, were it not for the indoctrinati’s universal economic illiteracy and blind faith in silly, televised, hype: Just like all else, there are severe diminishing returns to military spending per soldier. No doubt a $1 million kitted out Israeli or American “connected” warrior would enjoy a clear edge over a $50 Taliban sandalist. But assemble four of those fifty buck fighters, and the million dollar man is still toast in he end. Similar story in Gaza, it seems.
You left out the West backed AQ/ISIS factions for the US/Europe side!!!
I doubt India would be on our side. Neutral at best.
Probably not the cause of world war itself. But like Versailles at the end of WW1 leading to WW2, the creation of modern Israel after the second world war, is a primary event.
The mass migration of European Jews into Palestine was one of the worst, most problematic developments in modern history.
Where did you want them to go?
They had no homes to go to, and have wanted to return to Palestine for 2000 years. The Allied victory against the Ottomans during WWI solved multiple problems after WWII.
Israel being populated by Jews is not a problem to anyone except those who dislike Jews, who undoubtedly used to all live there in the past anyway.
I was thinking the same thing.
You in the 70s the preachers were talking about the end of days. Bern pondering that thought ever since i saw that golden idol of trump at cpac a few years ago.