A growing disconnect between equities and other major asset classes is emerging as investors assess the fallout from the ongoing U.S.-Iran conflict, according to new research from Deutsche Bank. The bank’s research team noted that U.S. Treasury yields and oil prices have continued to move closely together since tensions escalated, signaling that fixed-income markets are increasingly pricing in the...
A growing disconnect between equities and other major asset classes is emerging as investors assess the fallout from the ongoing U.S.-Iran conflict, according to new research from Deutsche Bank. The bank’s research team noted that U.S. Treasury yields and oil prices have continued to move closely together since tensions escalated, signaling that fixed-income markets are increasingly pricing in the risk of a longer-lasting geopolitical disruption. Equities, however, have broken away from that pattern in recent weeks. During the first month of the conflict, oil, bonds, and stocks largely moved in tandem as investors reacted uniformly to rising geopolitical uncertainty. Since mid-April, though, that relationship has weakened as equity markets stabilized despite continued strength in crude prices and Treasury yields. Deutsche Bank analysts said the divergence suggests stock investors may be treating the conflict as a temporary shock with limited long-term economic damage, while bond markets appear more concerned about a prolonged period of instability and inflationary pressure tied to higher energy costs. The contrasting market behavior highlights the uncertainty surrounding how persistent geopolitical tensions could ultimately affect global growth, inflation, and monetary policy expectations. Market Tracking ETFs: ( DIA ), ( DDM ), ( DOG ), ( DXD ), ( SDOW ), ( SPY ), ( VOO ), ( IVV ), ( RSP ), ( SSO ), ( UPRO ), ( SH ), ( SDS ), ( SPXU ), ( QQQ ), ( QQQM ), ( TQQQ ), ( QID ), and ( SQQQ ). Oil ETFs: ( USO ), ( UCO ), ( DBO ), ( OILK ), and ( USL ). Fixed Income ETFs: ( TLT ), ( TLH ), ( IEF ), ( IEI ), ( SHY ), ( SGOV ), ( SCHO ), ( BIL ), ( AGG ), ( BND ), ( VCIT ), ( MUB ), ( MBB ), ( JNK ), ( LQD ), ( HYG ), ( VTIP ), ( TIP ), ( SCHP ), ( STIP ), ( TIPX ), ( SPIP ), ( WIP ), ( GTIP ), ( LQDI ), and ( RINF ). More on markets BNP Paribas warns that the Middle East conflict will slow global growth and fuel inflation Yields slide as U.S.-Iran deal hopes spark an oil se...