Excerpt from CGS International report.

Report Summary

• Rising bond yields are pressuring equities, with the risk that higher rates could destabilize markets, especially as government deficits become persistent and monetary policy loses flexibility.
• Ongoing oil supply shocks, driven by geopolitical risks (e.g., Iran conflict), are pushing up inflation and yields, amplifying downside risks for equities and making economic growth more vulnerable.
• Markets have not fully priced in these downside risks; equities may fall further unless there is policy easing or de-escalation of energy shocks.
• Long-term inflation expectations are declining, suggesting markets expect a medium-term growth slowdown due to energy supply constraints.
• Bonds are losing their effectiveness as a diversification tool amid fiscal deterioration and rising debt loads, but negative sentiment and recent market pullbacks indicate some risks are being priced in.

Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgsi.com