Castle Securities believes that the impact of the Middle East conflict on the market is entering a new stage.

Castle Securities said that the impact of the Middle East conflict on the market is entering a new stage, with investors shifting their focus from the initial inflation shock to the impact on global economic growth. Strategist Frank Flight wrote in a memo to clients on Monday that the shift towards weaker economic activity and "demand destruction" may benefit longer-term inflation-adjusted bonds. At the same time, he said that bullish options on the dollar provide "attractive asymmetric" protection against further escalation of the Iran situation. President Trump said on Monday that he would delay strikes on Iranian energy infrastructure, leading to overnight gains in US stocks and bonds. However, Flight warned that any easing of the situation could not reverse the "some lasting damage" to the global supply chain. "The market is forced to confront the reality of at least partially disrupted demand, as well as the many butterfly effects of the conflict," he wrote. "The next phase may depend more on the degree of growth impact rather than the escalation of the conflict."