A look at which assets are following the script, and which aren't, on day 75 of the war

Dow Jones05-14 17:29

MW A look at which assets are following the script, and which aren't, on day 75 of the war

By Steve Goldstein

This screen grab taken from undated video footage released by Iran's Revolutionary Guards (IRGC) and made available via Iran's state broadcaster (IRIB) on April 23, 2026, shows IRGC naval forces allegedly boarding a ship attempting to cross the Strait of Hormuz. TD Securities finds that bonds have behaved as expected during an inflationary shock.

There's nothing financial market participants like more than round numbers, and on day 75 of the war on Iran it's worth looking at how financial markets are behaving versus other big crises.

Izidor Flajsman, senior rates strategist at TD Securities, ran an update to the firm's analysis of big inflation shocks in the past and what happened in markets.

First, the typical response to six previous inflationary regimes: on an inflation-adjusted annualized basis, commodities returned 11% while the S&P 500 SPX fell 6% and the U.S. 10-year Treasury BX:TMUBMUSD10Y retuned negative 5%.

The chart here shows what's behaving like the past and what is not:

Fixed-income - shown both on the chart, as well as a more detailed breakdown of corporate credit and other maturities of U.S. government bond - is behaving like it has in previous inflationary outbreaks. Data released by the U.S. Labor Department this week showed consumer prices jumping 3.8% and wholesale prices surging 6% in the 12 months ending April.

The big outlier is the stock market. Breaking the results out by sector, and most of the sectors actually are behaving as expected -- it's just tech, telecoms and retail that are not.

Tech XLK, and to a lesser extent telecoms XTL, have been driven by the frenetic AI rally. Retail XRT is the interesting outlier, but ahead of Thursday's retail-sales report, it looks like spending has so far weathered a spike in gasoline prices.

Gold (GC00) and silver (SI00) also are not following the inflation playbook, but both had surged ahead of the Iran war.

-Steve Goldstein

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 14, 2026 05:29 ET (09:29 GMT)

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A look at which assets are following the script, and which aren't, on day 75 of the war

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