What Happened
An active war involving Iran has disrupted global supply chains for critical raw materials, aviation, tech, and manufacturing inputs. This is not a tail risk becoming live; it is the geopolitical escalation cluster our framework explicitly tracked as a 20% probability scenario, with the trigger threshold defined as four escalation events within six hours.
What Our Data Says
The data picture is unambiguous on the inflationary transmission mechanism, even accounting for staleness. WTI crude (stale, ~21 hours old) was last quoted at $92.57/bbl, with FRED data pointing to $114.01, a significant divergence that likely reflects different data vintages rather than a single clean price signal. Brent (also stale) was at $97.03. The directional takeaway is clear without fabricating a price change: oil was already in a structural uptrend with +36.2% one-month momentum before this event. An Iran shock, historically correlated with $15–$30/bbl Strait of Hormuz risk premia, now overlays on that existing momentum. Our pre-flagged scenario called for WTI at $125–$145 in a confirmed escalation. That range is now the base case trajectory, not an outlier.
Gold (stale, ~21 hours old) last printed at $4,820.45, consolidating at all-time highs. CFTC positioning sat at the 17th percentile, emphatically non-crowded. With positive expected value across all four macro scenarios before this event, gold now has an additional geopolitical premium driver that wasn't priced in. The bull case is structurally reinforced.
VIX data carries significant unreliability: the PriceSnapshot shows 34.54 while the FRED daily reads 25.78, a material divergence with no clean resolution. We will not construct a volatility narrative from this. What we can say is that the Stagflation regime already assigned a Risk Aversion Index (CRAI) of 60, elevated but not at crisis levels, and an Iran war escalation would push that materially higher.
HY credit (HYG stale at $79.72, HY OAS at 3.12bp per today's FRED) appears remarkably complacent for a supply-chain shock of this magnitude. Credit markets have not priced war risk. This is the clearest mispricing on the board.
What This Means
This event doesn't change the stagflation thesis, it entrenches and accelerates it. The oil pass-through to CPI was already the market's most dangerous miscalculation; WTI at $92–$114 had not yet appeared in inflation prints. Add a war premium and the April 10 CPI release, tomorrow, becomes even more pivotal. If tomorrow's print comes in at or above 3.0% (20% pre-event probability, now likely higher), the stagflation confirmation will be accompanied by an active commodity supply shock. That combination puts the Fed in an impossible position: hike into a growth slowdown, or hold while inflation re-accelerates toward 4%.
For equities, the 98th-percentile CFTC short in ES was already the key structural tension. A geopolitical shock combined with a hot CPI print removes the primary scenario, a soft-landing short squeeze, that posed the greatest risk to that bearish positioning. The 20% soft-landing probability effectively collapses in this scenario.
Positioning Implications
The single most important thing to watch is Brent crude at the open: a sustained print above $105 confirms the Strait of Hormuz risk premium is being actively priced and validates the $125–$145 WTI scenario. If that occurs alongside tomorrow's CPI at ≥3.0%, gold at $4,820 is not the ceiling, it is the floor. Watch HY OAS for the credit dislocation signal; at 3.12bp, it remains far too tight for a supply-chain war event and the snapback, when it comes, will be fast.
Explore these indicators together: Chart Household Financial Obligations Ratio, WTI Crude Oil, and 3 more on the Indicators Dashboard