"When A Butterfly Stings Like A Bee": Citadel Securities Sees Markets Forced To Confront Growth Implications Of Extended War Disruption

Authored by Frank Flight, Citadel Securities,

We see focus starting to shift from the first order impact of the conflict – which has been characterized by a hawkish repricing of global policy during the kinetic phase – onto the second phase, in which the growth implications start to take center stage, as markets are forced to confront the reality of at least some demand destruction and the myriad butterfly effects of the conflict. We think lower forward real rates will become the primary channel via which markets trade the growth narrative once global front ends stabilize.