New Delhi, April 21 -- Throughout the war in Iran most investors have bet that an economic catastrophe would not take place. Oil and gas prices would need to rise to the stratosphere to destroy demand for the fuel that flows through the Strait of Hormuz. That would cause recession and high inflation. So commodities prices rose to painful, rather than disastrous, levels. The planned reopening of the strait seems to have justified the optimism. As we published this, stocks and bonds alike had rallied. The S&P 500 index of stocks sat only about 3% beneath its all-time high, reached in late January.

If the ceasefire fails the rally would be reversed and then some, because investors would have to price in a war that is resistant to peacemakin...