Credit and conflict: the stories moving markets

This episode of Market Matters explores the interconnected macro forces driving global markets in early April 2026: the U.S.-Iran ceasefire and its aftermath, persistent inflation pressures from elevated oil prices, and growing stress in private credit markets. The ceasefire announcement triggered a sharp risk-on rally, with oil prices plunging and equities surging, but the subsequent failure of peace talks and the U.S. decision to blockade Iranian ports in the Strait of Hormuz reversed sentiment, reigniting volatility and pushing oil back above $100 per barrel. The episode emphasizes that the oil shock is not a temporary blip but a lasting supply disruption affecting global energy and inflation dynamics, with spillover effects on transportation, manufacturing, and consumer prices—particularly in oil-importing economies. While U.S. inflation spiked to 3.3% year-over-year in March, driven almost entirely by energy and gasoline, core inflation remained stable, leading the hosts to advocate for a balanced Fed outlook with one to two rate cuts expected later in the year despite market whiplash. On credit, the team remains constructive despite headlines of redemptions and bankruptcies in liquid private credit vehicles, framing the stress as cyclical and sector-specific rather than systemic, with a growing emphasis on underwriting, diversification, and manager selection as the credit cycle matures. The overarching theme is that uncertainty is now the new normal, requiring investors to be more selective and resilient in portfolio construction. Key takeaways include: 1) Geopolitical events like the Iran conflict are driving sustained market volatility and reasserting the U.S. dollar’s safe-haven status; 2) Oil price shocks are creating persistent inflationary pressures, especially outside the U.S., with effects rippling through global supply chains; 3) Despite near-term credit stress, private credit remains a vital engine for middle-market growth, but returns now depend more on selectivity than broad market exposure; 4) A maturing credit cycle demands greater focus on fundamentals and diversification, not avoidance of risk; 5) Investors should embrace volatility as a backdrop and build portfolios resilient to a wide range of outcomes. The overall sentiment is cautiously optimistic, grounded in data and long-term perspective.