What’s most worth watching today is not a single stock price, but two fronts heating up together: Russia-Ukraine and Iran. ETF Radar sees this more like a day when 'geopolitical risk continues to transmit into the economy'.

First, look at the first step. The latest Russian battlefield assessment mentions that Putin is trying to further militarize Russian society, meaning more resources, manpower, and public opinion are being pushed toward the war machine. Put plainly, the war is not about winding down; it looks more like preparing to fight longer. This matters not just because of the front lines. More crucially, it will make markets worry again about sanctions, transportation, energy, and fiscal strain.

At the same time, the special reports on Iran are still being updated, indicating the Middle East conflict has not really cooled. Imagine two sensitive regions tightening at the same time, investors will have a hard time treating it as just 'news from afar'. Because once geopolitical conflicts are prolonged, the first things markets tend to repricing are oil, shipping, defense, and the global inflation path. Repricing means everyone’s willing price needs to be rewritten. What once looked like low risk now looks like higher risk, and prices naturally change.

Step two, transmission to supply chains. A recent study on 'reindustrialization and great power competition' mentioned that deterrence is not just about verbal statements, but also whether capacity can keep up. In plain terms, when tensions arrive, whether there are enough factories, materials, components, and transport capacity matters more than slogans. This ties directly to the two conflicts mentioned above. Because once the security environment worsens, countries will care more about whether 'critical things can be made domestically, transported stably, and supplied long term'. That will continue to push capital and policy toward defense, energy, and industrial infrastructure, and make it harder for global supply chains to return to the previous lowest-cost-first model.

Step three, transmission to rates and bonds. There is one important but easily overlooked data point today: the spread between the US 10-year and 2-year Treasuries is 0.34. The spread is the long-term government bond yield minus the short-term government bond yield. Put plainly, it is a thermometer for how the market sees 'future growth and interest rates' evolving. This number being positive means long bond yields are still higher than short bond yields. Coupled with the earlier-mentioned war, oil, and supply chain worries, markets are prone to think in one direction: inflation may not fall so quickly, and central banks may not loosen policy that quickly. To be even clearer, if oil and transport costs are pushed up, prices are easier to be held up; if prices are held up, central banks are less willing to cut rates quickly; if they do not cut, borrowing costs stay high; and where borrowing costs are high, the most pressured are often long-duration bonds, real estate, and utilities—areas sensitive to rates.

There is a small exception to point out. Today is not a full-blown panic. SPY was still up 0.02% on the day, indicating the broad market appears relatively stable on the surface. But QQQ fell 2.00% over the past 5 trading days, and semiconductors are noticeably weak. It’s like calm seas on the surface, but high-valuation, long-duration, and policy-sensitive sectors have already started to feel the change in wind direction.

Now into ETFs. First, the ones most related to today’s main themes.

The first, ITA, which is US Aerospace & Defense. ITA actually rose 6.39% over the past 5 trading days. And the ETF Radar model is mildly positive on ITA for the next 1 to 3 months, with fairly consistent signals. It links directly to today’s main narrative. Because prolonged geopolitical conflict usually boosts defense demand. There are three pieces of quantitative evidence. First, in historical analogs there are 179 post-conflict defense samples, with an average 20-day return of +2.97% and an up probability of 0.84. An up probability of 0.84 means in similar past situations, about eight out of ten times it rose. Second, in this thematic window ITA has accumulated a gain of 13.25%, while SPY rose 2.12% over the same period, an excess return of 11.13%. Excess return means it outperformed the market by 11.13%. Third, net inflows over the past 3 days were +0.08% AUM. AUM is assets under management, net inflows mean new money is coming in. Short interest also fell by 4.6%, meaning fewer people are betting on a fall. These readings align with the Russia-Ukraine and Iran news today.

The second, BNO, which is Brent crude related. This one also has a real transmission from today’s news, since conflict escalation most readily hits oil first. But to be honest, BNO is not on today’s must-report ETF list, and the system gave a medium-term mildly positive view, but there is no G segment 5-day actual change to report, so here I can only add qualitative context, not a full primary recommendation. The model is mildly positive on BNO for the next 1 to 3 months, with relatively strong signals. Quantitative supports include: EIA crude oil inventories are about 726M barrels and are declining. Inventories falling, plainly speaking, means there is less oil sitting in storage. Also, the futures roll spread is -10.031%. This is a spot premium, plainly speaking that means 'nearby supply is more sought after than forward supply'. Additionally, total open interest is 770,415 contracts, up since the start of the month, indicating more capital is participating in this direction. But also note, BNO fell 7.34% on the day, showing very large short-term volatility. The model looks at the next 1 to 3 months, not a guarantee it will rise tomorrow.

The third, IEF, which is the 7−10 year US Treasury ETF. IEF actually fell 0.28% over the past 5 trading days. And the ETF Radar model is leaning negative on IEF for the next 1 to 3 months, with consistent signals. This ties to today’s main thread. Because if geopolitical risk lifts oil and inflation expectations, bond prices typically come under pressure. Quantitative evidence: first, CFTC COT net long-minus-short difference is -2,064,805 contracts. COT is the large trader positions report in futures markets; this very negative number, plainly speaking, means there is still heavy force betting on higher bond yields. Second, the US 10-year yield is about 4.69%, and the term premium is about 0.7787%. Term premium is the extra return investors demand for holding long-term bonds because of longer lock-up and higher risks. A high number here is generally unfriendly to bond prices. Third, net fund flows over the past 3 days were -0.04% AUM. Although not large, it is at least not a visible return of money. Here price and signals are consistent: it fell in the past week, and the model is biased negative for the outlook.

The fourth, TIP, which are inflation-protected bonds. TIP actually fell 0.61% over the past 5 trading days. Looking forward, the model points to a negative bias on TIP, with multiple pieces of evidence aligned. Many will ask, if they are inflation-protected bonds, why would they be weak when inflation concerns rise? The key is the 'real rate'. Real rates are nominal rates minus inflation. If real rates rise quickly, TIP prices can still be pressured. Quantitative evidence: first, US 10-year yield 4.69%, 10-year real rate 2.43%. Second, TIP’s excess return versus SPY in this theme window is about -1.92%. That is, it underperformed the market by 1.92%. Third, in options put IV 9.5%, call IV 4.98%, skew is +4.52 points. IV is implied volatility, plainly speaking the options market’s price for future volatility. Puts are pricier than calls, usually indicating stronger demand for downside protection. Here price and the model’s view are consistent: it has been falling over the past week, and the model is still biased negative for the medium term.

The fifth, SMH, which is semiconductors. This one is not the most direct line from today’s war theme, but it relates to 'great power competition and supply chain security'. SMH is not on the G segment must-report list, but there are single-day and 1-month readings for cross-validation. The model is biased negative on SMH for the next 1 to 3 months, with consistent signals. Quantitative evidence: first, net fund outflows over the past 5 days were about -1.58% AUM. This means some money is pulling out. Second, FINRA short interest accumulation rose 30.4%, days-to-cover is 1.48. Shorts are bets on decline; days-to-cover can be understood as how many days it would take to cover if shorts rushed to cover together. Third, put IV 56.44% is higher than call IV 54.90%. This indicates more demand for downside protection. Looking at price action, SMH fell 2.25% on the day and 10.31% over the past month, weak on both short and medium horizons. If today’s news is about 'security first, supply chain reshuffle', high-valuation tech faces not just earnings risk, but also valuation and policy uncertainty.

Putting today together, the main thread is actually simple: Russia-Ukraine and Iran remain tense, so markets are repricing energy, defense, and supply chain security; this in turn pushes up inflation and high-rate worries, and therefore bonds and high-valuation growth sectors are more likely to be under pressure. The medium-term readings ETF Radar now gives are broadly aligned with this chain. One more reminder, the above are system quantitative model directional forecasts for the general market and do not constitute investment advice tailored to you personally; consult a licensed investment advisor before investing.