Military confrontation continues in Iran, sustaining the global inflationary impulse through energy prices. This inflationary impulse has material effects for all asset prices. This inflation shock has caused much debate amongst the macro community about its implications for US Treasuries. We leverage our systematic process to offer some insight into how to navigate these conditions as a fixed-income investor. As usual, we’ve tested our reasoning over time to understand the range of possible outcomes better.
We visualize this below:
In this note, we discuss the principles driving the signal visualized above. We aim to provide a simple, actionable framework for thinking about Treasury exposure during this period of macroeconomic and geopolitical volatility.
