Global Markets Defy Geopolitical Tension as Inflation Slows

The US government has launched 'Operation Economic Fury', a campaign to disrupt Iran's oil revenues and weaken its economic power through sanctions, shipping restrictions, and financial measures.

Despite this heightened tension in the Middle East, global equities have reached new record highs, and FX carry trades are thriving. The VIX index has fallen to its lowest level of 2026, indicating low cross-asset volatility.

Beneath the surface, inflation is slowing, as evidenced by benign US inflation prints and softer labour market data. This has strengthened the disinflation narrative and helped underpin risk sentiment across markets.