Markets Are Underestimating Odds Of "Timely" Reopening Of Strait; Citadel Securities Warns On Inflation

Authored by Frank Flight via Citadel Securities,

We are more constructive than consensus on the prospects for a US-Iran deal that reopens the Strait in a timely manner. In markets, we see scope for global duration to rally, while thematic equity sectors such as Retailers, Homebuilders and Airlines could serve as high-beta proxies for a reopening. Central bank pricing can also relax further in Europe, the UK and Australia. While we expect USD rates to participate fully in the initial leg of the rally, we are skeptical that move can be sustained once the dust settles, given accelerating economic fundamentals.

Market Reaction to Strait Reopening