Equities are off their lows while bonds have once again given up gains
It is the perennial debate in markets: Fear vs Greed.
There is no doubt that US-Iran tensions are continuing to cast a large shadow over proceedings to start the week. But at some point market participants will reach a crossroads and question, "Is the worst already behind us?".
The fear now is that we will see US-Iran tensions escalate further in the Middle East with the worst-case scenario being some military war, although I doubt we would reach such a point; then again, it's Trump and Iran - so never say never.
As we look towards North American trading, bonds have once again given up gains while equities are slowly paring losses on the day. European equities are also off their earlier lows while US futures have also gained some ground over the past two hours.
US yields are more or less flat across the board while S&P 500 futures are down by just ~0.5% following more sizable losses earlier in the European morning.
Looking ahead, there is little left on the economic calendar today to shift the dial in markets. As such, it is all about sentiment and the risk mood. There is still reason for market participants to stay cautious (fear) but in the absence of any major drivers - should there be a lack of headlines too - will we see more risky behaviour (greed) prevail?
I reckon that will be a tricky question for traders and investors this week.
