Video: Contained Escalation

Geopolitical risk returned to the forefront in February, as the Iran conflict sparked renewed volatility and pushed investors toward higher-quality assets. Credit and securitized markets reacted with widening spreads in some segments, while areas perceived as safer saw stronger demand. For advisors, this environment underscores the importance of stress-testing portfolios for event risk and reassessing liquidity needs.

While diversification and active positioning can help manage these shocks, they cannot eliminate market or credit risk, and investors should be prepared for periods of elevated uncertainty. Careful security selection, awareness of interest-rate sensitivity and ongoing monitoring of geopolitical developments remain central to navigating fixed income allocations today.