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Ask Your Advisor: How has the Israel-Iran war affected Middle Eastern and global credits?
While the war in Gaza rages on, a new flashpoint between Israel and Iran is stirring up bond markets
By Daniel Andrew Tan
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The recent escalation between Israel and Iran has triggered a wave of volatility across global markets, with Middle Eastern bonds, particularly those of lower-rated issuers, notably underperforming.
Investors have responded to the geopolitical shock by shifting to safe-haven assets and higher-quality credits, reflecting heightened risk aversion.
Market reaction and bond performance
Following Israel’s airstrikes on Iranian nuclear and military sites on June 13, oil prices surged by up to 14% intraday before settling around 7% higher, then rising throughout the week. This spike reignited inflation concerns, pushing US 10-year Treasury yields higher as front to belly yields in USTs (US Treasuries) and other developed markets rallied.
The bond market’s reaction underscores fears of stagflation
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