Hormuz, we have a problem. Do we?

Bond markets are pricing the war in Iran. Equity markets are not. That divergence has become a defining feature in the past month. The conflict has now moved beyond the initial shock phase and has entered a regime of repeated escalation, partial de-escalation and unresolved disruption. Oil prices remain elevated, shipping lanes are still disrupted and inflation expectations have moved higher. Yet equities have largely recovered from the initial shock and are no longer reacting mechanically to every geopolitical headline, but require more evidence of macro transmission before possibly repricing...