Updated

For months, investors operated on the assumption that President Trump would ultimately back down whenever tensions with Iran escalated, encouraging a 'buy the dip' strategy known as the TACO trade. However, in September that playbook appears to be breaking down, raising questions about whether markets are underpricing the risk of a prolonged conflict. The shift comes as the conflict has intensified, including strikes drawing UN scrutiny for alleged war crimes, leaving traders uncertain about how to price geopolitical risk going forward.