Financial markets are underpricing the risk posed by the ongoing conflict in the Middle East, according to one geopolitical strategy expert.
With one month since the start of the US and Israeli attacks on Iran, energy prices have seen significant spikes in price. However other parts of the financial system have been far more muted.
"We would probably say the markets have been underpricing the risk from this," said Simon MacAllister, co-head of geopolitical strategy and partner at EY Ireland. "This day last week, US markets were only 6% below the record highs from January, which doesn't feel intuitively right. At the end of last week, it was 9%.
"So there is a worsening in the markets but it probably isn't getting to the levels we would think probably is a fair reflection of it."
The movement of bond markets has gained a particular significance in the past year, with many seeing it as a brake on some of the more dramatic moves by the Trump Administration.
Its negative reaction to the US President's initial tariff plan led to him delaying implementation and softening his time - and many expect it will also be what ultimately prompts him to wind down his military action in Iran.
But while it has taken a somewhat dim view of the economic impact of the conflict, it has not been a dramatic shift so far.
"The level that seems to have been the brake is normally about 5% or 4.5% and last week it closed at about 4.4%. So it is getting close to it," he said.
Feeding into that is an increasingly negative view about the prospects of the US economy.
"Our US chief economist has downgraded US growth by about 0.4 percentage points and global growth by about [0.3 points]," said Mr MacAllister. "And they're obviously spending a huge amount in the 'One Big, Beautiful Bill' - so they're running a deficit of about 6% of GDP.
"So all of that is playing into the market's view around the picture of the US sovereign debt."
In the meantime, global supply chain disruption is growing - not just in terms of oil and gas, but other goods too.
That is also leading to knock-on effects for companies, according to Mr MacAllister.
"We're starting to, but I suspect we still won't see the full effect for another few months," he said. "We now have a better awareness of some of the industrial products that come from those [materials] that are going to be in short supply over the next few months.
"And what does that cause as a second or third order impact in terms of supply chains as people work through shortages with those?"
And unwinding those negative impacts will take time, even if the conflict were to stop in the immediate future.
"So gas, for example, for Qatar will take five to six weeks to restore and that won't even be to full production because they've had damage to some of it," he said. "And then you have the physical shipment time to get those products from A to B."
Mr MacAllister said there are signs of supply chains trying to adapt to deal with the new reality - meanwhile companies in Ireland and beyond are turning to continuity plans to try to mitigate the impact the conflict is having on their own operations.
"Some of them have product still stuck but they're working around that in terms of where they would move product to or from," he said. "The balance is around trying to just work out what sort of scenarios are people looking at for the next few months.
"So what sort of duration could this conflict have and then, if there is a settlement, how durable is that settlement going to be. From that you can start to think about potential energy price scenarios and the sort of shortages issues that different companies will face."
