Investing.com -- Barclays told clients in a note on Friday that recent market resilience driven by de-escalation signals from U.S. President Donald Trump may be fading as policy uncertainty intensifies.

Analyst Emmanuel Cau wrote that “constant flip-flopping and headline fatigue is starting to undermine the put efficacy”.

Cau noted that equities have so far been supported by what he called Trump’s “apparent willingness to de-escalate the conflict,” adding that markets reacted sharply to the shifting deadlines the president set for Iran to reopen the Strait of Hormuz.

“Panic in oil, rates and equities was palpable when markets opened on Monday, before Trump extended to Friday the 48h ultimatum,” he wrote, noting the deadline was later pushed again after another day of stress.

Barclays stated that the situation “remains fluid and rather confusing” as Israel intensifies strikes and the United States reportedly sends more troops to the Middle East.

While hedge fund and CTA de-grossing may help tactical positioning, Cau commented that resilient price action indicates the “market wants to go up.”

He added that long-only investors “remain in the glass half-full camp,” leaving the risk of a prolonged conflict “under priced.”

Barclays warned that the longer the conflict and related oil shock persist, the stronger the threat of stagflation.

“Our economists now expect global growth in % Q4/Q4 2026 terms to be 2.9%, while global inflation will get pushed higher to 2.7% by end-2026. Advanced economies in aggregate are expected to grow only 1.7% 2026 (all Q4/Q4), driven by weaker growth in the euro area (0.7%), the UK (1.0%) and Japan (1.4%),” concluded Cau.