• US Treasury yields showed moderate increases, with the 6-month rising 3.0 bp (3.72%) amid expectations of stronger inflation readings, while corporate yields widened slightly, indicating increased risk aversion; HY OAS climbed 4.0 bp to 2.87%. • The S&P 500 fell 0.63% as major tech stocks like Apple and Tesla faced selling pressure, contributing significantly to a broader risk-off tone following rising geopolitical tensions related to Iran. • Energy commodities, particularly WTI crude, surged 3.99% to $90.38, reflecting supply concerns driven by the ongoing conflict in Iran, which has heightened volatility in the market. **Recommendations** • Consider shorting high-beta tech stocks — ongoing geopolitical tensions and a mixed earnings season could drive volatility. • Look for opportunities in energy equities — the recent surge in oil prices could lead to further gains in the sector. • Monitor inflation metrics ahead of upcoming economic data — specifically, Wednesday's CPI report which could significantly influence Fed expectations. The equity markets experienced a risk-off session today, primarily live to a rise in tensions surrounding Iran. Several headlines, including news of new sanctions against Iran and bleak investor sentiment in Europe, triggered market reactions. According to Reuters, the world's top condom maker, Karex, signaled supply chain strains due to the Iran conflict, raising concerns about broader economic impacts. This came alongside President Trump's comments about the stock market resilience amid the war, which added to the uncertainty. The S&P 500 dropped 45.13 points to close at 7064.01, with tech giants like Apple (-2.52%), Tesla (-1.55%), and Alphabet (-1.52%) leading the declines, reflecting broader investor concerns about the tech sector's vulnerability to geopolitical developments. Economic data releases today showcased some strength, particularly in retail metrics. Per the economic calendar, retail sales m/m unexpectedly rose by 2.13%, substantially outpacing expectations of a 1.4% increase. This strong figure hints at solid consumer demand, and the positive momentum aligns with the ongoing Atlanta Fed GDPNow estimate of 1.24% for Q1 2026, indicating growth resilience despite geopolitical tensions. However, the market's reaction was muted, as investors appeared more concerned about political risks than encouraging data, reinforcing a risk-off environment. In the fixed income markets, US Treasury yields increased across maturities, with the 6-month yield up 3.0 bp to 3.72%. The widening of high yield option-adjusted spreads to 2.87% reflects increased risk aversion and credit concerns in the wake of the current geopolitical climate. This movement signals cautious investor sentiment, as market participants are anticipating tighter financial conditions, particularly if inflation continues to trend upwards. The liquidity regime signal indicates improving conditions, marked by strong positive momentum (+0.729), suggesting that liquidity might be able to support risk-assets despite other pressures. Commodities were mixed but showed significant strength in energy markets, particularly WTI crude oil, which surged 3.99% to $90.38 amid concerns surrounding supply disruptions linked to the Iran war. Meanwhile, precious metals came under pressure, with gold falling 2.19% to $4731.60, reflecting a stronger US dollar and rising bond yields. Notably, silver plummeted 3.98%, a z-score outlier, highlighting a potential shift in risk sentiments as investors rotated out of safe-haven assets amid rising volatility, as evidenced by the VIX climbing 7.95% to 19.50. Looking ahead, investors should prepare for key upcoming economic releases, including the CPI print on Wednesday, which is anticipated to greatly influence market sentiment and policy expectations. Additionally, the earnings season continues, with notable reports from major companies like Amazon on Thursday and Tesla tomorrow, which could provide further insights into sector dynamics and market resilience. The overall tone remains cautiously risk-off as markets digest heightened geopolitical risks amid sticky inflation and potentially mixed earnings results. Monitoring data releases and geopolitical developments will be critical for shaping market positioning in the coming days.