Wall Street Tail-Risk Hedges Rally as Conflict Shakes Markets

For months, Wall Street’s panoply of risk-hedging strategies did little but lose money. Now, as uncertainty sparked by the war with Iran hits the market’s most popular trades, investors that loaded up on portfolio protection are being rewarded.

The spiraling conflict in the Middle East has wiped out some $6 trillion in global equity-market value over the past week while catapulting oil above $100 per barrel for the first time since 2022. Prices for 10-year Treasuries fell for five-straight sessions last week and volatility has surged across asset classes, reversing months of calm in a matter of days.