BlackRock: Ongoing Iran conflict poses risk of stagflation shock

Golden Ten Data, March 10｜BlackRock Investment Institute stated that the Middle East conflict is triggering an energy-led supply chain shock, causing distinctly different impacts around the world. Strategists including Jean Boivin and Wei Li wrote in a report: Market pricing suggests the disruption will last for weeks, rather than days or months. In a global environment dominated by supply factors, this conflict has heightened inflation risks, which is also why U.S. Treasury yields have risen slightly and such bonds have failed to serve as a safe haven. "The rise in yields is consistent with our view: the current risk is an inflationary supply shock, rather than a demand-driven economic slowdown." "There is a risk of a stagflation shock, but it is not inevitable, and the market pricing has already reflected this." BlackRock is currently underweight on long-term U.S. Treasuries and is optimistic about U.S. equities.