by Martin Baccardax
Barron’s
However with Iran threatening retaliation for the attacks and vowing to escalate its conflict with Israel, investors are bracing for the impact of a major oil price shock over the coming weeks.
A spike in crude prices that lasts into the summer months and beyond could stoke inflation pressures, hammer U.S. GDP growth forecasts and corner the Federal Reserve into a “wait-and-see” stance on monetary policy that could delay interest-rate cuts until the end of the year.
“At this moment, global attention is centered squarely on Iran and the nature of its response to recent developments,” said Kristian Kerr, head of macro strategy at LPL Financial. “The situation remains highly fluid, and much hinges on whether Tehran opts for a restrained reaction or a more aggressive course of action.”