Outside of commodities the biggest moves have been in bonds, where short-term yields have spiked. But the upward pressure on longer-dated bonds has been less extreme compared with previous market shocks like the 2022 inflation surge caused by the Covid pandemic and stagflation in the 1970s. At the same time, expectations for economic growth have not been heavily impacted by the war, which has limited the pain for stocks.
We spoke to Mueller-Glissmann about how markets are responding to the war in Iran and his view on the optimal portfolio.
Why didn’t stock markets decline more due to the Iran war?
We’ve been surprised by how resilient equities have been in the face of both the energy and the rate shock. The big concern now is that the rate shock eventually weighs on growth expectations.
There is going to be some lasting damage, and our economists have downgraded their growth and…
