Developments in the Middle East are set to cast a long shadow over markets in the coming weeks.

Over the weekend, the US and Israel launched major combat operations against Iran, prompting retaliatory measures from the Islamic Revolutionary Guard Corps (IRGC) across the region. The escalation has heightened geopolitical risk, with investors likely to remain sensitive to energy flows, shipping routes and safe-haven dynamics.  

SocGen expects the UK Spring Statement to be a subdued affair. “Chancellor Rachel Reeves announced in the 2025 Autumn Budget that the government would be assessed against the fiscal rules only once a year in the autumn. While the OBR will not assess the government against the fiscal rules this spring, it will still publish an Economic and Fiscal Outlook. Combined with the Chancellor’s preference to deliver only one fiscal event a year, we do not expect any policy announcements.” (LS - Continue Reading) 

President Trump said on Sunday that the U.S. military intends to sustain its assault on Iran for “four to five weeks” if necessary, insisting that it “won’t be difficult” for Israel and the United States to maintain the intensity of the battle even as he warned of the possibility of more American casualties.

In a brief telephone interview with The New York Times, Mr. Trump offered several seemingly contradictory visions of how power might be transferred to a new government — or even whether the existing Iranian power structure would run that government or be overthrown. 

Among the options he suggested was an outcome similar to what he engineered in Venezuela, in which only the top leader was removed during an American military strike and much of the rest of the government remained in place, but newly willing to work pragmatically with the United States. (NYT – Continue Reading) 

For the past year, economists have modeled the impact of US President Donald Trump’s chaotic trade war. Now, it’s a real war they’re assessing. 

The most immediate impact from the escalating Middle East conflict is through market reaction as investors take flight to safe havens such as the dollar and gold, while stocks slump. That leaves smaller economies, especially those with scant foreign exchange reserves  vulnerable. (BBG – Continue Reading)