Fixed income outlook amid Iran war (with Romaine Bostick, Isabelle Lee)

3/3/2026 8:52:57 PM	short term up	5 days later	+26.94%	+26.94%

Asks what's fundamentally different from 2022 Russia invasion playbook.

Romaine Bostick

Bridge Kurana

Labor market fundamentally different: then +500K jobs/month, last 6 months lost jobs. Core inflation then ~6%, now ~2.5%. Consumer surplus ~$2T mostly worked through.

Energy prices short-term inflationary, but long-term disinflationary if causes consumers to retrench/raise savings, dependent on Fed not easing and no more fiscal spending.

Asks what signals looking for from Fed tomorrow.

Isabelle Lee

Bridge Kurana

Focus on 2026 dot. Could go back to unchanged (no cuts) given Iran and committee makeup; hawkish surprise possible.

Market pricing ~1 cut for 2026; new chair (Warsh) likely in two meetings could change outlook.

Asks if Treasuries can recoup losses if Fed goes expected direction.

Romaine Bostick

Bridge Kurana

Value in long duration bonds if temporary inflation shock, no more fiscal stimulus, Fed doesn't ease. Term premium already in prices.

Safer to move outside US; other markets pricing hikes (AU/NZ +100bps next 2yrs); higher yields ex-currency risk.

Asks about emerging markets given Iran/energy prices.

Romaine Bostick

Bridge Kurana

EM local bonds interesting; fundamentals strong: policy rates high, inflation coming down, not spending fiscally, room for cuts. Commodity prices can help some economies.

Was attractive last year, temporary repricing due to war.

Asks how exposed US to foreign selling if high energy prices pressure Japan/Korea.

Isabelle Lee

Bridge Kurana

~$28T US assets held abroad. Oil prices in their currencies near 25yr highs. If high oil continues, may need to sell US assets to fund oil balances.

Financial impacts could be dramatic even if economic impacts muted; not many thinking about it.

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