A seismic shift appears to be underway in the Iran campaign.

Until just 48 hours ago, an imminent U.S. strike on Iran seemed like speculative noise (also to us admittedly). Now, it’s emerging as the dominant geopolitical narrative with markets rapidly re-pricing the risk. With Iran’s air defenses reportedly neutralized, the door is suddenly wide open for a swift and decisive U.S. operation targeting Tehran’s nuclear infrastructure — and possibly the regime itself. 

The asymmetric opportunity for the U.S. here is enormous: a limited high-tech airstrike campaign, potentially removing a decade-old threat, and all without putting boots on the ground. From a market perspective, this echoes the dynamics of Operation Desert Storm in the early 1990s — a quick, surgical campaign that sent equities flying.

But beneath the surface of a seemingly “clean” intervention lies the specter of regional chaos. We’ve seen this movie before — in Iraq, Libya, Syria, and Afghanistan. The initial campaigns were militarily efficient. The aftermaths? Decades of civil war and power vacuums. Yet the markets tend to focus on the first act. When the world realizes that Iran’s nuclear threat may be extinguished — or at least dramatically rolled back — risk assets could soar. 

The closure of the U.S. embassy in Israel and whispers of “something spectacular” from Tehran suggest the countdown is ticking. Trump’s recent Air Force One comments — “I want an end to this, or else…” — only underline how little appetite there is for prolonged engagement. If this unfolds the way it appears to be heading — a swift strike, no quagmire — markets may celebrate the shock and awe. Iran may be toast. And Wall Street may light the cigar. That is our base-case for the coming days.

Let’s have a look at what it means for markets outside of risk assets, specifically commodities, rates and FX. 

Chart 1a: These conflicts are typically great buying opportunities