Today, geopolitical risk is no longer a series of isolated events; it’s a defining feature of a more fragmented, multipolar world.
Since the Middle East conflict began, inflation has been a foremost market concern, highlighting the role that inflation-linked bonds can play in portfolios.
Approaches that emphasize shorter-dated inflation-linked bond exposures and more targeted tools such as inflation swaps can enhance the inflation-hedging properties in portfolios.
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Markets have long struggled to price geopolitical risk. Part of the issue is that each flare-up tends to be viewed as a one-off volatility jolt to be weathered and then faded once there is resolution.
