Thought leadership Uncommon Truths: Inflation Risks and Investment Consequences

March 29, 2026
Person filling up gas

Key takeaways

  • Oil and inflation:

    WTI spot prices are up ~50% y-o-y, underscoring diversification benefits of broad commodities. Historically, similar moves have coincided with a temporary ~1ppt rise in headline CPI.

  • Energy pass-through:

    Evidence from Spain suggests March inflation will reflect higher energy prices. Inflation persistence will hinge on the duration of the Iran conflict and Middle East supply disruptions, with central banks watching spillovers to wages and core prices.

  • Asset implications:

    While energy-driven inflation and pressure on risk assets may ease in Q2, a more durable inflation shock would limit investor havens – historically favoring energy, sometimes gold, and short-duration assets. 

Rising energy costs are leading to fears of higher inflation; historically a difficult environment for financial markets. We suspect any jump in inflation will be short-lived but that will ultimately depend on how long energy prices stay high and whether other prices and wages follow them upward.

Investor conversations are naturally dominated by the situation in the Middle East. It is hard to give definitive answers when resolution of the conflict relies on the decisions of three actors that are not always acting in ways that follow military and economic logic (emotions are running high). However, the global economy and financial markets have to live with the consequences.

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