Despite a bumpy opening of markets this week, investors are still positioned for a near-term resolution of the Middle East conflict, and overnight headlines seem to offer new hope again. We’ll likely see more volatility around the front end of the curve and oil moves around, but the long end still does not show signs of inflation expectations being unanchored. Also, if we look at the spread between 10Y Bunds and swaps, we don’t see signs of significant risk-off sentiment. Although one could argue that Bunds are not as obvious a hedge from a renewed escalation, given this would likely be paired with higher inflation. Besides, as long as growth concerns are contained, equities may offer a more attractive proposition.  [...]