Matt Orton, Head of Advisory Solutions and Market Strategy at Raymond James Investment, told ET Now that while negotiations between the US and Iran are showing faint signs of progress, the picture remains far too murky to justify taking on fresh risk. His message to investors: stay defensive, protect your gains, and wait for clarity.
What Monday’s rally got wrong
When the White House announced a temporary five-day pause on attacks targeting energy infrastructure, markets reacted euphorically. But that excitement has given way to a sobering reality: almost nothing concrete has followed.
“There has been a lack of clarity with respect to who the US might be speaking with,” Orton said. More critically, there has been no resolution on the reopening of the Strait of Hormuz — which he describes as “the most important part of energy markets and frankly, the key to getting global equity markets back on track.”
The pause has since been extended, and some ships have been permitted through the strait — potentially a signal that those in talks with Washington do have genuine access to Iranian leadership. But Iran continues to send mixed messages and publicly deny negotiations are even happening. With the strait now closed for at least 10 more days, Orton says it is “premature to get too optimistic.”
Nowhere left to hide
What makes this environment especially punishing for investors is the near-total collapse of traditional portfolio hedges.
Energy prices are rising — as you’d expect in a Middle East crisis. But long-dated bond yields are rising too, with 10-year UK gilts and German bunds sitting at their highest levels in 15 to 18 years. The US 10-year Treasury yield is hovering around 4.4% — a level that, as Orton notes, “does not reflect concerns about a growth slowdown,” which he believes is the real risk lurking beneath the surface.Gold, long the investor’s crisis refuge, has also stopped functioning as a hedge. “Frankly, gold has been very correlated to technology stocks,” Orton said. The only genuine shelter has been in energy assets — which is a deeply uncomfortable position for most diversified investors to lean into.
The result? A market environment where the rational response for many is simply to sell first and ask questions later. “Cash levels are still fairly low across many retail and institutional investors,” he noted, which is amplifying the sell-off as people scramble to build buffers.
Rate cuts are off the table: But don’t expect hikes either
A month ago, markets were pricing in more than two US interest rate cuts for 2026. That expectation has now swung so dramatically that some market pricing reflects a potential rate hike this year.
Orton thinks that’s an overreaction. “Rate hikes, at least in the case of the US, are far-far away,” he said. Significant structural changes would need to occur before the Fed moves in that direction — changes he doesn’t expect. Rate hike expectations, in his view, are overdone and could become a tradeable opportunity in fixed income once conditions stabilise.
For Europe, ECB President Lagarde has been clear that it takes a prolonged period of elevated oil prices before inflation is genuinely reignited in the broader economy. That gives the ECB room to pause without being forced to hike. The bottom line: rate cuts are delayed, not dead — but don’t hold your breath waiting for them.
The level to watch in bonds
Despite the US 10-year yield sitting at 4.4% — a point where many would consider bonds compelling given that the Fed funds rate is 75 to 80 basis points lower — Orton isn’t ready to extend duration just yet.His threshold is 4.5%. “That is a level where I think the trade-off becomes a little more compelling,” he said, adding that it’s also the point where yields would start to act as a natural ceiling, keeping further rises in check.
The bottom line
Orton’s stance is unambiguous: this is not a buying opportunity yet. “I still remain fairly risk off, I am in P&L protection mode and I am not ready to put new money to work.”
Until there is genuine clarity on the geopolitical front — and above all, a credible path to reopening the Strait of Hormuz — expect markets to remain volatile, defensive, and deeply uncomfortable for multi-asset investors on both sides of the Atlantic.