What the Iran Crisis Left Behind: The Signals From the Dollar, Yields, and Precious Metals

Only stocks are smiling

Despite a recent little hiccup, the equity market is still holding a solid upward drift. But the rest of the market is not at all cheery about what's happening in Iran.

To be precise, it's not that the Nasdaq and S&P are thrilled about Iran. It's that their attention is more on data centers and AI right now, and corporate earnings have been strong. 85% of the stocks I track are beating EPS estimates. As long as the earnings numbers are good, equities hold up regardless of what's happening in the Middle East.

The real story is in the assets outside of stocks. Let me lay out the five signals I'm watching.

1. The dollar — a safe haven in fear

The dollar has shown broad strength since the onset of the war, because it acts as a bit of a safe haven. When fear rises, people rush to hold cash, and that cash ultimately flows to the global reserve currency.

2. Oil — off its highs but still elevated

Oil has come down somewhat recently, but it's still generally much higher than where it started at the onset of the war. In other words, the market hasn't fully stripped out the supply-risk premium.

3. Bond yields — cut hopes flipped to hike expectations

This is the shift I weigh most heavily. Bond yields have ripped higher since the war began, essentially erasing expectations of a rate cut this year. The market is now even pricing in the possibility that the Fed hikes.

4. Gold and silver — bowing to the macro

Gold and silver have been big losers in all of this. The very shift from the Fed talking about cutting rates to talking about hiking is no bueno for precious metals.

I'm short the silver ETF (SLV) myself. I've given back a good bit of my profits, but I'm still holding the short because I remain broadly bearish on precious metals. That said, if it breaks the key resistance near my 69 level that I flagged yesterday, I'm out — I take profits and move on. If it keeps moving lower, I'll trail my stop further into profit. From here, I'm just following price action.

5. The 'TACO' move — stay skeptical

We got another so-called 'TACO' move, with Trump saying he'd go back in on Iran and then walking it back to reopen negotiations in good faith. We've seen this headline play out far too many times.

My playbook is clear: be skeptical until both sides agree. That has been the right call so far. Until we get a sign of concession from both sides — or full capitulation from one — on the two very binary issues of the Strait of Hormuz blockade and ownership and the nuclear program, the market will keep looking at this skeptically.

Putting it together

Here's my current stance: neutral on indices, bearish on precious metals, bullish on the dollar. With equities holding firm while the rest of the market frets, you can't judge the whole market off a single asset. You have to read the signals from the dollar, yields, and oil together to see the full picture.