Greg Ip

On Monday, oil rose, but it didn't rise as much as a lot of analysts had expected.

Stocks fell off, sold off, but at the end of the day, mostly unchanged.

Tuesday, we wake up and it's almost like a delayed reaction.

It's just, oh, wait a minute, there's a war going on.

Oil goes up some more and stocks fell.

But even so, you know, I've been through a lot of these things over the years.

Right now, it still feels like a muted reaction by the markets to what's going on in Iran.

Sure thing.

So let's talk about the bonds part.

That's a little bit easier to explain.

So when people worry about inflation, for example, because oil prices are going up, they worry that the Federal Reserve will not be able to lower interest rates as much if interest rates aren't going to go down.

That means bond yields are probably supposed to be higher than they already are.

When bond yields go up, prices go down.

And that is exactly what we've seen happen in the last couple of days.

A small decline in bond prices, a small increase in bond yields.

So if you were hoping for some relief last week, mortgage rates dropped below 6%.

Don't expect them to go much lower.

Maybe they go a little bit higher the next day or two.

The issue with the dollar is an interesting one, Kai, because the dollar did go up, which is sort of what is supposed to happen when there's a war because the dollar is a safe haven.

But it's been a break from the prior year when you had all this geopolitical conflict and the dollar was going down.