In our team meeting this morning, we were discussing the market action around the fighting in the Middle East. I pointed out that I found it weird that bonds sold off today. My mental model was that when military conflicts or other major geopolitical events started, you normally get a "flight a safety" to bonds that pushes their yields lower. Yet, bond yields were higher today. And, since gold rallied, my mind jumped to the idea that gold had replaced treasuries as the "safe" asset for many large investors and this was evidence. I had my research piece topic for the weekend.

So we asked our AI tools to pull together a table of major geopolitical events and conflicts in the last 30 years and what happened to bond yields in response. The idea was to show how weird today was. ChatGPT and Claude both responded with complete nonsense. This left the old- fashioned way: opening Excel and doing it ourselves. Here is the unreadably dense table we produced. The highlighted cells are some of the case studies we think are relevant to today and/or interesting to ponder. The synthesis: bonds almost always shrug off events like this, and the market action today was totally normal. Based on the evidence, I (and many financial commentators and fintwit personalities) were just wrong.

One of the things I love most about markets is that even after studying them for ~20 years I still learn something every day.

Re performance: Titus had outsized returns in the last 24 hours. We will dig into the anatomy of those trades in our Q2 letter. If any non-clients receiving this email would like to get that letter or learn more about how we managed the portfolio through the event, please let us know.