Most quick assessments of the impact of a continued US-Israel/Iran war work of reduced form responses to oil shocks. I’m not sure how equity market responses, quantitatively, fit in. However, I suspect that higher uncertainty and perceived risk may prove the catalyst for a sustained correction.
Author Archives: Menzie Chinn
Pre-War/Conflict/”Excursion” GDP, Core GDP, and Nowcasts
2025Q4 2nd release, GDPNow, and Survey of Professional Forecasters:
Business Cycle Indicators: GDP Growth Downshifts, Consumption Slows, Downside Surprise
Q4 GDP growth halved, Q4 consumption undershoots consensus by nearly half percentage point (ann’d):
Probability of 2 Qtr Negative Growth in 2026 at Post-Strike High
From Kalshi:
Uncertainty Regarding Trade Policy Remains High
Most recent data (last available Caldara et al. TPU at 3/6):
Some Numbers for SecTreas Bessent for Benefit Risk Assessment
In consideration of tanker escorts, some ballpark figures.
Betting on Recession 2026: Up to 32% fm 21% pre-War
But down from peak 37%. From Polymarket:
“How energy prices figure into the Fed’s interest rate decisions”
From MarketPlace today with Justin Ho, Claudia Sahm and I comment.
Grocery Prices Continue to Rise
And are rising faster than in the last year under Biden.
Trump: “The straits are in great shape”
Brent approaches $100/bbl again, volatility keeps on rising, and Straits open end-April less than eve-odds.
Source: BBC.