Recent market action shows 'huge amount of optimism' for resolution in Iran War, says Citi's Moore
Summary
- Market action reflects cautious optimism for de-escalation in the Middle East, but Kate Moore is nervous about potential prolonged conflict.
- Energy shock could have broad-based inflationary impact across the entire energy spectrum, not just oil.
- Gold was added to portfolios as ballast for risk assets, but stretched positioning led to underperformance in recent risk-off moments.
- Fixed income adjustments: added short-duration bonds as yields had moved too far towards rate hike expectations; trimmed emerging market debt due to lack of yield movement.
- Inflation expected to be "spicier" in 2026, complicating the Fed's ability to cut rates.
- Cautious on European equities: earlier multiple expansion wasn't supported by fundamental improvement, and disrupted natural gas could increase inflationary pressures, hindering growth.
- Emphasis on building portfolio resilience against both inflationary risks and extended conflict scenarios.
Trade Ideas
Kate Moore added gold to the portfolio as ballast but notes that positioning has become very stretched. Stretched positioning reduces gold's effectiveness as a hedge in risk-off moments, as seen in recent underperformance. Therefore, gold requires caution and monitoring (WATCH) due to potential lack of hedging efficacy. If geopolitical tensions escalate or positioning unwinds sharply, gold could see volatile price movements.
Kate Moore added short-duration bonds to the portfolio last week. She believes yields, especially on the two-year, had moved too far towards expectations of a rate hike, making short-duration attractive. Therefore, she is bullish on short-duration bonds (LONG) as a resilient position amid uncertain inflation and Fed policy. If inflation proves more persistent than expected, yields could rise further, negatively impacting short-duration bonds.
Kate Moore trimmed emerging market debt from the portfolio in response to the lack of price action or yield move during the crisis. The muted response indicates that EMD may not provide the desired resilience or yield advantage in the current risk environment. Therefore, she is avoiding emerging market debt (AVOID) due to poor risk-reward and insufficient hedging benefits. If global growth accelerates or yields decline, EMD could become attractive again.
Up Next
This CNBC video, published March 25, 2026, features Kate Moore discussing GOLD, SHY, EMB. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Kate Moore · Tickers: GOLD, SHY, EMB