Shock, Then Repricing

March was dominated by a sharp rise in geopolitical risk, with Middle East tensions pushing oil higher and forcing markets to reprice inflation, growth, and policy expectations. Rates sold off across major developed markets as investors scaled back Fed cut hopes and priced a more hawkish path in Europe, while credit held up better but showed wider spreads and greater dispersion.

Against that backdrop, the outlook favors careful duration exposure rather than chasing short-term volatility. The current view is that inflation concerns may be overdone relative to the growth slowdown risk, which supports adding duration selectively while staying neutral on curve positioning.

In credit, valuations have improved enough to keep the asset class constructive overall, but returns are likely to come from carry and security selection rather than broad spread tightening. Securitized products remain a high-conviction area because they have shown resilience through the rate shock and still offer attractive relative value.

Emerging markets also look compelling where real yields are high and policy frameworks are credible, though country selection matters more now given energy sensitivity and currency volatility. The main risks remain sustained oil strength, sticky inflation expectations, weaker global growth, and rising dispersion across sectors and issuers.