A few weeks ago, many thought the Iran war could be the event that finally broke the market. The fear was straightforward: oil spikes above $100, inflation returns, and recession follows. It was one of the rare macro calls almost everyone agreed on.

And yet… it didn’t happen.

The market absorbed the shock far better than expected. Now the war has cooled, oil has fallen back to roughly pre-war levels, and the global economy continues to show surprising resilience.

Even the IMF recently called the global economy “overall resilient”. Growth has slowed, but not stalled, and inflation remains largely contained to energy rather than spreading broadly.

If war and higher oil prices couldn’t break this market, lower oil and easing geopolitical tension could actually become a tailwind.

Sometimes the most bullish signal is not what happens during bad news, but what doesn’t happen.

I also wanted to show a chart this week that speaks for itself. This has been a terrible decade for bond holders. Annualized 10 year returns for this decade have been -0.6%. Another important reminder that diversification is essential. Not only amongst more risky assets but also among conservative assets as well.

Source: Creative Planning

I have also included a piece from our CIBC Economics team entitled “Ditch the dots”.

As always, if you have any questions, please feel free to give us a call at any time.

Have a great weekend.

Milan