Iran Volatility's Long-Term Risks to Equities and Fixed Income

• Geopolitical developments in the Middle East and oil prices are key market drivers, potentially raising inflation.
• Higher inflation could lead to increased longer-term bond yields, with the 10-year yield potentially staying above 4%.
• For conservative investors, fixed income (Treasuries, MBS, TIPS, investment-grade corporates/munis) offers attractive entry points and diversification, with caution advised on credit risk.

The discussion focuses on the impact of Middle East geopolitical tensions and macro data on financial markets, particularly fixed income. While recent jobless claims and CPI data are stable, the market's primary concern is the outlook for oil and the Middle East, which could drive inflation and bond yields higher. For conservative investors, higher yields in fixed income offer better entry points and diversification.