Between Geopolitical Shock and Stagflationary Transition
Global markets are going through a phase of major turbulence in the wake of the conflict between Iran and the United States. This shock has had significant repercussions across markets: crude oil surged by +65%, global equities recorded a maximum drawdown of -9.5%, while the US 10-year yield climbed 50 basis points, peaking at 4.43%. Over the quarter, the 60/40 portfolio is down -2.0% in USD and -1.0% in EUR. During the month, our market regime assessment model also shifted into risk-off mode, following the deterioration of all its components.
Macro: Towards a Stagflationary Regime?
It seems unlikely that Brent will swiftly return to its pre-conflict level, with rather direct consequences: less growth and more inflation. Forecasts for 2026 have accordingly been revised to 2.3% for US GDP, while CPI inflation rises back to 3.0%. The 2-year breakeven inflation jumped to 3.29%, against 2.33% for the 10-year, a spread of 96 basis points, reflecting a sharp but still potentially transitory shock. The spectre of stagflation is thus resurfacing and could call into question the monetary easing cycle initiated by many central banks.
Cautious Allocation and Tactical Discipline
In this market environment marked by geopolitical fragmentation and the risk of monetary debasement, the allocation strategy had been adjusted as early as the end of February in order to prioritise capital preservation. Asset allocation reflects a logic of active prudence. Portfolios remain broadly underweight in equities, particularly US equities, in favour of greater diversification towards emerging markets, Japan and real assets. Commodities, gold and Swiss assets are favoured as hedges against the risks of stagflation and currency depreciation, while cash continues to play an important role in the current environment. We maintain a strong overweight in liquid alternatives, with a preference for antifragile strategies to address market drawdown risks. Conversely, caution remains warranted on private markets. The private credit segment is showing signs of fragility, raising the risk of contagion across private assets as a whole, particularly semi-liquid funds, which have grown significantly in recent years.
Inflection of the Risk-Off Environment: Between Resilience and Opportunities
The risk-off environment calls for caution before rushing to “buy the dip”. At the end of March, however, signs of de-escalation began to emerge, both from the White House and from the Iranian side, allowing for an initial shift in market sentiment. This development leads us to consider entry points on certain particularly discounted assets: Korea, whose valuations stand at around 7x earnings, or the “Magnificent Seven”, which have returned to their lowest relative level since 2019.
That said, it is portfolio resilience that remains the priority, through a balance between real assets and antifragile strategies.
Written on 2 April 2026, by Emmanuel Ferry, Union Securities Switzerland