Summary

• Oil shocks tend to matter if they persist. History suggests markets reprice risk not on the initial spike in prices, but when elevated energy costs linger long enough to tighten financial conditions.
• Consumer strength is increasingly split by income. Higher prices and tighter credit are straining lower‑income households, while asset‑rich households remain supported by elevated housing and equity wealth.
• Credit stability masks growing dispersion. Structural buffers are helping contain stress in senior securitized credit, but widening gaps between prime and subprime areas point to differentiation beneath the surface.

Markets may be pricing some relief for now, but the true measure of an oil shock is how long it endures.

The Middle East ceasefire sparked a relief rally last week as markets dialed

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