Markets are caught in a stagflation squeeze, according to this week's published research. Elevated crude from Hormuz supply disruption is forcing central banks across the G7 and emerging markets to keep hiking, pushing yields to multi-decade highs — while a credibility scare around AI capex is cracking growth assets and stripping the dollar of its usual safe-haven bid.
The research consensus is heavily bearish on the euro, pointing to French fiscal strain, violent protests, French-German bond spreads at post-crisis wides, and Le Pen's rising poll numbers. Most analysts also now expect the Fed's next move to be a December hike rather than October, and remain constructive on crude near-term given depleted inventories and a persistent risk premium.
The genuine split is on US 10-year Treasury yields: one camp sees yields falling as inflation eventually eases through 2026-27, while a contrarian thread argues for a push toward 6% before year-end if the oil shock compounds.
A notable standalone warning: some recently published work argues private credit recovery rates will disappoint badly when the cycle turns, as weak documentation and inflated valuations have hollowed out the senior-secured cushion investors assume is intact.