Our base scenario: We expect the Fed may lean hawkish, while rising oil prices driven by Middle East tensions could reinforce inflation fears.
This may support the following market reaction:
US Indices Bearish — higher yields and risk-off pressure may weigh on equities. Gold Downside Risk — stronger USD and hawkish Fed expectations may pressure bullion despite geopolitical tensions.
Oil Bullish — escalation and Hormuz risks may keep supply fears elevated.
Alternative scenario:If geopolitical panic dominates over yields, sharp reversals may occur with gold rebounding strongly and broader two-sided volatility across markets.
Key Takeaway:
Tonight is not a normal session. Fed policy + war headlines may trigger aggressive moves and sudden reversals.
Trade lighter, protect profits, and expect very high volatility.
