Markets are like a roller coaster. With many assets priced to perfection, it doesn’t take much to make them swing. The Middle East conflict and escalating oil prices have had an impact. Global equity markets have lost value, while spreads have widened on many fixed income securities.
Energy prices are a key inflation input, so rising costs increase the likelihood of faster and perhaps, more than anticipated, cash rate hikes.
Much depends on when the war finishes. Despite Trump’s assertions that it’s nearly over, Iran seems determined to continue and not agree to Trump’s terms.
We’ve started to see markets begin to settle. The CBOE Volatility Index or the VIX, spiked to around 30 points but has since retreated to around 25 points. This is nothing like the volatility seen back in April 2025 on ‘Liberation Day’ when Trump announced new tariffs with the VIX exceeding 50 points.
The RBA Monetary Policy Board meets next week to review the cash rate. If the war continues, I’m more inclined to think they’ll need to hike. However, they’ve been cautious for years and may, if there’s a quick resolution, wait until the next meeting.
Tim Murray from T. Rowe Price looks across asset classes at how the Middle East conflict is impacting markets.
Government bonds haven’t acted like reliable, safe haven assets according to Laura Cooper from Nuveen, who agrees that the duration of the conflict remains crucial. I really like her five takeaways at the end of the article.
Belated happy International Women’s Day. To celebrate, I interviewed Jenna Hayes, Executive Director and Head of Sales at Income Asset Management. Jenna has this fantastic energy and enthusiasm. It was a delight to hear about her journey to her current role and the tips she has for advancing your career.
The must-read monthly Australian Economic View is back with Emma Lawson from Janus Henderson, providing interest rate and inflation expectations. This month, Henderson focuses on AI productivity in the Australian context.
Colter Bay Capital has launched an institutional corporate private credit fund led by Mark Wang, who previously worked at CBA and Merrill Lynch in private capital markets.
Finally, we have a niche article on the UK and European rate environment from Tomasz Wieladek of T. Rowe Price.
Have a great week!
