This Is How Big Money Is Trading the War in Iran

What It Covers

Ozan Tarman, Deutsche Bank's vice chair of global macro, explains how institutional investors are positioning around the US-Iran conflict as of March 25, 2026, covering oil markets below $100 Brent, gold liquidation, rate repricing, private credit stress, and the concept of "bad volatility" in headline-driven markets.

Key Questions Answered

• •Pain Trade Positioning: The current momentum trade favors equities rising and oil falling, but the tail risk remains extreme. Many rate market participants entered the conflict already wounded from prior positioning, making them reluctant to take fresh bets. Flat portfolios are effectively outperforming in this environment — surviving intact is the primary objective before seeking alpha.
• •Rate Repricing Magnitude: Markets have moved from pricing Fed cuts to pricing four Bank of England and ECB hikes, then partially reversed to just under three hikes for both. This violent repricing closed entire pods and triggered widespread liquidation. Before the Iran attack, the US 10-year yield had reached 3.93%, reflecting a near-complete bull flattener consensus that reversed overnight.
• •Gold Liquidation Mechanics: Gold's sell-off from above $5,500 per ounce follows a two-stage pattern: first, traders liquidate winning positions to cover losses elsewhere; second, sovereign holders including China, Turkey, and India sell reserves to build defensive buffers. Monitoring which "strong hands" are selling reveals whether the liquidation is tactical or structural reallocation away from gold.
• •Physical vs. Paper Oil Divergence: Brent crude trading below $100 reflects paper futures markets, not physical reality. Qatar LNG requires months to restart post-Hormuz closure, Asian refiners face acute shortages, and physical Oman crude trades significantly above headline prices. These two prices must eventually converge — traders with front-month contracts have roughly one month before delivery obligations force price reconciliation.
• •Private Credit Contagion Risk: Redemption gates at funds like Ares and Apollo are being dismissed as orderly, but the systemic risk framing mirrors pre-2008 language. The critical transmission mechanism to watch: if investors cannot withdraw from private credit and are forced to sell liquid public equities and bonds instead, public markets face a secondary wave of selling pressure entirely disconnected from Iran fundamentals.