While the news flow remains dominated by headlines, a peace deal has now been signed between Iran and the US. But even if the Strait of Hormuz reopens, does that mean markets can simply return to the conditions that prevailed before the conflict?

For some market themes, such as the AI capex boom and higher fiscal spending, this will likely be the case. For others, however, a return to February conditions looks less likely. Inflation is an example. Expectations about the level and stability of inflation are unlikely to reset quickly given the risk of second-order price effects, and the continued tail risk of renewed escalation.

This probably explains why a growing disconnect has emerged across asset classes. Rates markets have adjusted, reflecting a more cautious stance on inflation and policy, while equity and credit markets continue to price a relatively benign outcome. Stronger-than-expected US labor data has reinforced expectations of prolonged restrictive monetary policy, while higher funding costs, combined with elevated debt levels, are adding to the pressure.

Monetary policy is no longer a clear tailwind for growth. Instead, it is expected to remain restrictive, or at best neutral, contributing to downward revisions in global growth expectations for 2026.