A five-day pause in attacks on energy infrastructure barely calmed markets — rising oil and longer-term government yields have left many investors parked in cash, says Raymond James strategist Matt Orton. The pause was extended and some vessels were allowed to transit the Strait of Hormuz, but Iran has denied talks are happening, and that opacity is keeping traders cautious.

Ceasefire optimism met reality Markets rallied when the White House said attacks on energy infrastructure would be paused for five days, but the relief was short-lived. The pause was extended and some vessels were allowed to transit the Strait of Hormuz, yet Iran has denied talks are happening. That lack of clear counterparts and outcomes is keeping traders cautious. "There has been a lack of clarity with respect to who the US might be speaking with," said Matt Orton, Head of Advisory Solutions and Market Strategy at Raymond James Investment. He argued that reopening the Strait of Hormuz is critical for oil markets — and for pushing global equities past their recent slide. Orton called it premature to get too optimistic: mixed messages from Tehran and only a temporary window for safer navigation make any upside fragile. Traditional hedges are failing Investors typically lean on long-dated government bonds, gold and defensive sectors when turmoil hits. None of those has behaved as expected. Long bond yields have risen rather than fallen: U.S. 10-year Treasury yields have climbed, and UK gilts and German bunds have reached multi‑year highs — moves that are unusual in a geopolitical shock when safe-haven demand normally pushes yields down. Gold, historically a crisis go-to, has tracked technology stocks and lost its role as a portfolio ballast. Energy is the only clear refuge so far, but leaning into one sector concentrates risk. Why yields are rising with oil Rising oil and rising yields force investors to rethink traditional relationships. Higher oil can pressure inflation and prompt central banks to keep policy tighter for longer; higher long yields reflect that pricing. Orton said the current 10‑year Treasury yield level "does not reflect concerns about a growth slowdown," implying bond markets are pricing stronger inflation or tighter policy even as growth risk may be building. That dynamic hits equities: higher yields increase the discount on future profits — especially for long-duration growth and tech stocks — while higher oil raises costs for energy importers and squeezes margins across industries. Where investors are sheltering With few reliable hedges, many investors have chosen cash. Others have shifted into energy-related assets, which have outperformed as commodities reacted to Middle East supply concerns. Key actions observed: - Holding cash to preserve capital and optionality. - Shifting into energy-related equities and commodity exposure for protection. - Trimming risky positions and adopting a defensive posture rather than trying to time a fragile diplomatic breathing space. Orton advised staying defensive: protect gains and wait for clearer signals. That reflects frustration with mixed market signalling — diversification only works when assets move differently, and recent mixed moves have sapped that benefit.

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"Stay defensive, protect your gains, and wait for clarity," said Matt Orton, Head of Advisory Solutions and Market Strategy at Raymond James Investment.

This article was created with AI assistance.