Capital Economics: The Iran war has not significantly changed US market risk appetite

Golden Ten Data reported on April 8 that Capital Economics stated in a report that if this ceasefire indeed leads to the end of the war, its impact on U.S. market investors’ risk appetite will be limited. The head of Asia-Pacific markets at Capital Economics pointed out that although market sentiment improved somewhat after the ceasefire, uncertainty remains—issues such as how the Strait of Hormuz will reopen have yet to be resolved. Even so, investors’ risk appetite has not changed substantially; key risk premium indicators such as the S&P 500’s excess earnings yield and the 10-year Treasury term premium have risen only slightly. Capital Economics said this may reflect that the market believes the Trump administration is willing to avoid escalation under market pressure. Nevertheless, analysts warned that deeper geopolitical divisions may be structural and will support a broader repricing of risk in the medium term.