No, Mr. Bond, I expect you to stay rangebound



The market decided to party like it’s 1999 this week, all the way down to a new all-time high for checks notes Intel. We may have less clarity than ever on how much oil will be allowed to flow through the Strait of Hormuz by this time next year, but investors have largely shrugged off that pesky question, as all major indices have moved aggressively higher while bond volatility compresses and the 10-year yield stays rangebound. We have no crystal ball on whether these trends can sustain themselves in the coming weeks, but this sequence of events is admittedly fairly problematic if your main heuristic for analyzing the Trump administration’s constraints revolved around the President’s sensitivity to financial market turbulence, which was supposed to be unavoidable and cataclysmic in any bout of extended volatility in the Middle East. Some may object that US financial markets are increasingly manipulated to absorb and offset the downside that should be prevailing right now, and we’d probably agree to a large extent, but that’s also the point: the name of the game is whether the US can use its exorbitant privilege of dollar supremacy (while it still lasts) to facilitate a realignment of the global chessboard in its favor. Time will tell whether the airplane can be repaired mid-flight (particularly given downstream commodity impacts that are piling up every day), but one team clearly has the right to yell “scoreboard” at this point in the action.

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