Cautious optimism regarding Iran de-escalation fuels markets

ISRAEL - In Brief 28 Oct 2024 by Jonathan Katz

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Geopolitics: On Friday night, Israel attacked three different sets of targets in Iran. The primary target, Iran’s anti-aircraft systems, seem to have been largely destroyed. The second set of targets involved missiles that were positioned to strike Israel potentially. Lastly, the operation struck 20 different sites, focusing on Iran’s missile and drone production facilities. Reports also indicate that Israel destroyed a facility essential for producing missile fuel, with some estimates suggesting it will take two years for this capability to be rebuilt. Israel, carefully balanced the need for a substantial strike, while leaving Iran room to choose not to retaliate. This approach also aligned with parameters the U.S. administration approved, a critical factor given Israel’s strategic dependencies. There is cautious optimism that this will de-escalate the direct conflict with Iran. Meanwhile, Israel’s offensive into southern Lebanon continues aimed and destroying tunnels, bunkers and Hezbollah military positions several kilometers from the border. Missiles and drones continue to be fired intensely into northern Israel. The military claims that this operation will be completed in a few weeks at most. In Gaza, Israel has reentered areas in the Jabalya area targeting Hamas operatives. Negotiations for a cease-fire have been renewed. The big question is still whether the present Israeli government is willing to compromise (regarding a withdrawal from parts of Gaza) in order to reach a ceasefire and hostage return, with the far-right parties in opposition. A possible ceasefire with Hezbollah could be easier to achieve but may also prove elusive. Bonds: Markets reacted optimis...