Summary

• Over recent months, our client conversations have centered on geopolitical tensions in the Middle East, the AI investment boom, and the opportunities and risks within private credit.
• That changed last week. Government bond yields came back into sharp focus as fears over the inflationary impact of the Middle East conflict drove yields higher across the curve in most developed markets.
• Within the current range, neither higher inflation breakevens nor higher real yields are necessarily negative for equities.

By Joe Amato and Ashok Bhatia

With all the focus on geopolitics, interest rates remain an important foundation for markets, and last week’s move higher in long-end yields provided a stark reminder of that.

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