What Happened
Iran launched ballistic missiles into an Israeli industrial zone, not a proxy skirmish, not a drone swarm intercepted at the border, but a direct state-on-state strike. That is a categorical escalation. Markets are processing it in real time.
What Our Data Says
The numbers tell an unambiguous story. VIX has surged to 34.54, up meaningfully from the 24.54 FRED close on April 5, a ~40% intraday implied-vol expansion that crosses our REGIME_BREAK threshold. WTI holds at $111.54 with Brent at $97.17, the WTI/Brent spread inversion is anomalous and worth monitoring, but the WTI print is the operative figure given U.S. futures liquidity. Gold is anchored at $4,679.70, which is notably not the spike you'd expect on a fresh geopolitical shock of this magnitude, it suggests the market already had substantial geopolitical premium baked in from the Hormuz closure thesis, and the marginal buyer is waiting for the dust to settle before pushing toward our $5,200+ scenario target. HYG at $79.56 and HY OAS at 3.17bp are not yet at distress levels, but the direction is unambiguous. TLT at $86.79 reflects the bond market's stagflation trap: a quality-bid impulse is fighting the inflation-repricing impulse, and inflation is winning.
The Sahm Rule reads 0.20, still below the 0.50 recession trigger, but that number was printed April 5, before today. The 10Y TIPS real yield at 1.97% is the structural bear case for equities in one number: multiple compression is arithmetic at these levels, and a geopolitical shock does not relieve that pressure.
What This Means
This event does not introduce a new macro regime, it accelerates the one we've been operating in. Stagflation Deepening, NVI 80/100, was already the classification. What changes today is the probability distribution across our four scenarios. The Hormuz full closure scenario (previously 20%) just got a material probability upgrade, an Iran willing to fire ballistic missiles at Israeli soil is an Iran for whom Strait closure is a live escalation option, not a deterrent posture. That reprices oil tail risk significantly. Our $145–175 WTI scenario in full closure is no longer a stress case; it is a planning scenario.
Gold's behavior is the most analytically interesting data point. At $4,679.70, unchanged on the day, it is either telling us the geopolitical premium was already priced, or that a wave of institutional accumulation is absorbing retail selling and preventing a spike, which is structurally bullish. Either interpretation is consistent with our 29-consecutive-cycle STRONG BULLISH thesis. The $5,200–6,500 spike target activates if Hormuz escalation follows.
Equities at SPY 655.83 have not yet repriced the full scenario. With ES CFTC net spec at -77,843 (short), a violent relief rally remains the primary near-term mechanical risk, but that squeeze thesis requires a de-escalation catalyst, and today's event moves the probability of de-escalation in the near term sharply lower.
Positioning Implications
Long gold remains the highest-conviction position in the book, today's event confirms and does not challenge it. The single most important variable to watch in the next 48 hours is whether Israel's response targets Iranian energy infrastructure: a strike on Kharg Island would be the explicit trigger for Hormuz closure and would move WTI toward $130 before the week ends. Watch Kharg Island, not the diplomatic wires.
Explore these indicators together: Chart WTI Crude Oil, Brent Crude Oil, and 3 more on the Indicators Dashboard