Market betting on short-term war, despite conflict appearing to escalate

LootboxPhobia · 2026-03-16T15:49:55+00:00

Yardeni Research report indicates that despite escalating Middle East conflict, financial markets have remained resilient, with investors seemingly betting that the war will be brief. Although oil prices are elevated, they remain below last year's peak, with markets staying calm due to expectations that supply disruptions may not be as severe as feared.

LootboxPhobia

2026-03-16 15:49:55

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Investing.com - Yardeni Research stated in a report to investors on Monday that despite the escalating conflict in the Middle East, financial markets have shown a certain level of calm, indicating that investors are betting on a short-term war even as the situation worsens.

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“Considering all factors, the response of energy and financial markets to the Middle East conflict has been quite stable,” the company wrote, noting that investors “seem to believe the war will be brief.”

President Donald Trump did not provide a clear timeline; he said in an interview that he would know when the war is over “from the gut,” according to Yardeni Research, a stance that has increased volatility.

However, key indicators remain within manageable ranges. The company emphasized that while oil prices are high, they are still below the peaks of 2022, and the S&P 500 has only fallen 5% from its all-time high in January, with gold “hovering around $5,000.”

Despite this resilience, Yardeni Research warned that “the war appears to be escalating.” The firm wrote that Iran has launched multiple drone and missile attacks, laid sea mines, and claimed to have “full and smart control” of the Strait of Hormuz.

The U.S. responded with large-scale airstrikes, including what Trump called “one of the most powerful bombings in Middle Eastern history.”

The company stated that markets might feel reassured by signs that the actual blockade “is not as severe as widely feared,” as oil is leaking into global supply through bypass pipelines, emergency reserves releases, and selective security transit arrangements with China and India.

“Given the above, the Strait blockade may not be as serious as widely feared, including by ourselves. Of course, we hope so. If that’s the case, it could explain why energy and financial markets have not panicked so far,” the company concluded.

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