
Volatility as the new regime: navigating rates, forex and geopolitical risk
The current geopolitical backdrop, particularly the escalation of war in the Middle East, has reinforced a shift that has been building beneath the surface of markets for some time. Volatility is no longer cyclical, it is structural.
At the centre of this shift more recently lies the oil market. The Strait of Hormuz has become the focal point of disruption due to the fact that roughly 20 million barrels per day, close to a fifth of global supply, typically flows through this channel. Even partial impairment to these flows introduces a meaningful supply shock and with it, a repricing of inflation expectations globally.