{"id":1485,"date":"2026-06-09T15:40:56","date_gmt":"2026-06-09T15:40:56","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=1485"},"modified":"2026-06-09T15:40:56","modified_gmt":"2026-06-09T15:40:56","slug":"investors-spy-a-tipping-point-for-bonds-after-geopolitics-shreds-old-playbooks","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=1485","title":{"rendered":"Investors spy a tipping point for bonds after geopolitics shreds old playbooks"},"content":{"rendered":"<div>\n<div>\n<div>\n<ul>\n<li>Summary<\/li>\n<\/ul>\n<\/div>\n<div><\/div>\n<\/div>\n<div>MILAN, June 9 (Reuters) &#8211; Bonds have failed to shield investors during the Iran war. Now, some fund managers say that may be about to change, with debt poised to reclaim its safe-haven role if inflation starts \u200bhitting growth.<\/div>\n<div>World equities, which dropped in the first few weeks of the war, are back near record highs, fuelled by enthusiasm over AI and corporate earnings, while \u200csovereign bonds have been hit hard by fears of a protracted rise in inflation, which has driven government borrowing costs to multi-year and even record highs in some cases.<\/div>\n<div>That has not deterred investors from buying bonds. Lipper data shows that since the war broke out, a net $12 billion has flowed into developed-market government bond funds, accounting for all of the inflows this year.<\/div>\n<div>However, the pressure on debt markets means that since late February, safe-haven 10-year Treasuries have \u200bdelivered negative returns of 1.5%, which, annualised, is a negative return of 5.4%.<\/div>\n<div>German 10-year Bunds have returned a negative 2.4%, or negative 8.7% on an annualised basis, compared with returns \u200bof 9% for the S&amp;P 500 since the start of the war &#8211; or 39% on an annualised basis &#8211; according to LSEG data.<\/div>\n<div>The most recent \u2060survey of global fund managers from Bank of America showed investors are the most underweight in bonds since June 2022 and covering a short position in fixed income right now would qualify as \u200ba contrarian trade.<\/div>\n<div>Even with this most recent wobble in AI and tech stocks, equities are expensive and, with the arrival of another set of high-flying megacaps, such as SpaceX or OpenAI, they could become \u200beven more so, while the rise in bond yields means fixed income is cheaper than it has been in years.<\/div>\n<div>Stocks from Seoul, to Frankfurt and New York are around record highs and valuations higher than they have been in months or even years.<\/div>\n<div>\u201cIf you look around the globe, fixed income markets look very attractive; and this is also true in jurisdictions that have historically not been overly attractive like Europe and Japan,\u201d said Konstantin Veit, a \u200bportfolio manager at PIMCO, the world&#8217;s largest bond investor.<\/div>\n<div>&#8220;It&#8217;s hard to make the case that equities look very compelling,&#8221; he added.<\/div>\n<div>Meanwhile, Bund yields are around 15-year highs of 3.1%, while 10-year Japanese debt, \u200bat 2.6%, hasn&#8217;t yielded this much in nearly 30 years.<\/div>\n<div>If the Strait of Hormuz \u2014 the major choke-point for global oil flows that has been effectively shuttered during the conflict \u2014 reopens, current bets on rate rises could \u200cunravel, which would \u2060help bonds. Similarly, if it remains closed long enough to threaten global growth, bonds could benefit.<\/div>\n<div>&#8220;Inflation is already appearing in global data, with a risk of second-round effects via supply chains and input costs. Growth risks appear less fully priced though, which means that bond yields could fall back once inflation fears have peaked,&#8221; HSBC Private Bank strategists said in their mid-year outlook at the end of May.<\/div>\n<h2>THE DYNAMIC FLIPS IF THINGS GET TOUGH<\/h2>\n<div>A further escalation in the conflict, or a lengthy closure of the Strait of Hormuz, which handles around 20% of the world&#8217;s daily fuel needs, could push oil \u200bwell above $100, heightening concerns about the negative economic \u200bimpact of an energy shock.<\/div>\n<div>\u201cWhile the diversification \u2060on bonds has been disappointing so far, we do think that it will improve and materialise when it really matters,\u201d Andrew Sheets, global head of fixed income research at Morgan Stanley, said.<\/div>\n<div>\u201cWere the price of oil to spike to our commodity team\u2019s bear case to $130-$150 a barrel, we think yields \u200bwould start to fall as markets will turn more concerned of the effect of all of this on growth,\u201d he added.<\/div>\n<h2>BONDS WILL KEEP \u200bHAVEN STATUS IN SUPPLY-CHAIN SHOCKS<\/h2>\n<div>Oil \u2060isn&#8217;t the only risk. If rising risks around Taiwan or renewed U.S.-China tensions led to disruption in flows of critical inputs such as rare earth materials, or semiconductors, that could go straight to the heart of corporate profitability and hurt stocks.<\/div>\n<div>\u201cIf you have a geopolitical event that will impact the production of semiconductors, that&#8217;s going to impact massively financial markets,\u201d with the tech sector on the front line, said Yoram Lustig, head \u2060of global investment \u200bsolutions, EMEA at T. Rowe Price.<\/div>\n<div>The rate outlook is key as well. The Federal Reserve looks more likely to \u200blean in favour of rate hikes, which the bond market has already factored in, but the stock market may not.<\/div>\n<div>\u201cShould an aggressive Fed hiking cycle materialise, then I think that would be an environment where risk assets, including equities, would not \u200bdo particularly well,\u201d PIMCO&#8217;s Veit said, adding that this is not his firm&#8217;s base case for the U.S. rate outlook.<\/div>\n<\/div>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=1483\">SpaceX\u2019s lofty valuation set to put \u2018Elon premium\u2019 to test<\/a><\/p>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=1481\">Wall St rises as tech shares gain, Middle East tensions ease<\/a><\/p>\n<p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=1479\">Short-sellers to tread carefully as Musk\u2019s SpaceX debuts<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bonds have failed to shield investors during the Iran war. Now, some fund managers say that may be about to change, with debt poised to reclaim its safe-haven role if inflation starts \u200bhitting growth.<\/p>\n","protected":false},"author":1,"featured_media":1484,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-1485","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Investors spy a tipping point for bonds after geopolitics shreds old playbooks - Reliable Moving Crews<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/reliablemovingcrews.com\/?p=1485\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Investors spy a tipping point for bonds after geopolitics shreds old playbooks - Reliable Moving Crews\" \/>\n<meta property=\"og:description\" content=\"Bonds have failed to shield investors during the Iran war. 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