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ALTERNATIVE MARKETS UPDATE – END APRIL 2026

Thu, 30 Apr 2026 09:53:41 GMT

RESEARCH PERSPECTIVE VOL. 274
April 2026

Alternative Markets Update

Since the beginning of 2026, geopolitics has increasingly moved back to the centre of financial-market risk, led by the escalation between the US and Iran. The conflict has shifted from a regional military confrontation into a broader threat to global trade infrastructure, with Iran using asymmetric naval tactics, including fast boats, vessel seizures and threats around the Strait of Hormuz, while the US has responded with a naval blockade and efforts to secure maritime corridors. Shipping traffic through the strait has fallen sharply, with reports indicating that only a few ships passed through the waterway in a recent 24-hour periods compared with a pre-war average of around 140, leaving hundreds of ships and thousands of seafarers stranded in the Gulf. This has reinforced the importance of strategic chokepoints as a macro-financial risk, as disruptions now feed directly into global shipping, insurance costs, supply-chain reliability and inflation expectations.
At the same time, US political risk has remained elevated, with trade policy again becoming a key source of uncertainty. The continuation of Trump’s tariff agenda has complicated corporate planning, strained relations with allies and reinforced concerns around policy unpredictability, while the unresolved legal and political disputes around tariff refunds have added another layer of uncertainty for large importers. From there, the trade-policy debate naturally extends to the broader US-China conflict, where tariffs, export controls, critical minerals, manufacturing reshoring and technology restrictions remain central points of tension. Trump’s China tariffs helped reduce the US goods trade deficit with China in 2025, but did not materially change China’s industrial policy, while renewed disputes in 2026 have kept the relationship fragile ahead of further negotiations.
In Europe, the geopolitical backdrop has also reinforced the push towards higher defence spending, with NATO reporting that European allies and Canada increased defence expenditure by 20% in real terms in 2025, supporting defence and aerospace sectors but also adding to fiscal pressures at a time of weak growth and elevated borrowing costs.
The most immediate market transmission from the Iran conflict has been through the Strait of Hormuz, which has turned energy security into the central commodity theme of 2026 so far. As shown in Figure 1, crude oil is currently up around 70% YTD, as investors priced in the risk of disrupted tanker flows, higher insurance costs, and potential supply shortages across one of the world’s most important energy chokepoints. European natural gas has followed a similar pattern, rising by around 60% YTD and temporarily gaining as much as 120% during the height of the Iran war, reflecting Europe’s greater exposure to seaborne LNG markets, disrupted Gulf supply routes, and renewed concerns over storage replenishment. By contrast, US natural gas has been far less affected by the Iran shock, as Henry Hub remains primarily driven by domestic weather, production, and inventories. After briefly spiking by around 100% at the end of January due to severe cold weather and freeze-offs, US gas has since reversed and is now down roughly 30% YTD.

Figure 1: Indexed Crude Oil and Natural Gas Prices Since the Beginning of 2026, Source: Investing.com, April 2026

Following the sharp moves in oil and gas, uranium provides the natural bridge into the broader commodity complex. As shown in Figure 2, uranium is currently still up around 5% to 10% YTD, but the most notable move came in late February, when prices briefly surged and were up around 25% YTD, driven by renewed attention to nuclear energy security, tightening long-term supply, and utilities moving to lock in future supply contracts at higher prices. During that time, uranium has moved back into focus as demand tightens and utilities seek longer-term supply, while supply concerns remain visible in Kazakhstan and Canada. After the subsequent decline, uranium has traded relatively steadily, suggesting that the market has retained a structural support narrative even as the speculative premium faded.
Gold and silver followed a more volatile pattern. Both are still up around 5% to 10% YTD, but silver briefly spiked by more than 60% in late January before falling back towards a 20% gain, reflecting a parabolic rally after an already exceptional 2025, followed by forced deleveraging, margin pressure and profit-taking. In this timeframe, silver rose by more than 50% in January before falling sharply in late January, while gold moved in the same direction but less violently. Gold also experienced a significant correction despite its safe-haven role, as the Iran war lifted inflation and rate expectations, supported the US dollar and real yields, and forced investors to unwind leveraged positions in liquid assets.
Copper, by contrast, has been more stable. It moved relatively sideways during the early months of the year, weakened slightly during the Iran war as higher energy prices raised concerns around inflation, demand and financial conditions, but has since recovered as markets priced in a partial easing of geopolitical risk and continued medium-term demand from electrification, grid investment and data-centre infrastructure.

Figure 2: Indexed Performance of Gold, Silver, Copper & Uranium Since the Beginning of 2026, Source: Investing.com, April 2026

Following the geopolitical and commodity shock, the macroeconomic narrative has shifted decisively back towards inflation. While 2025 was defined by gradual disinflation and a growing willingness among central banks to ease policy, 2026 has so far been characterised by renewed upside risks to prices. The transmission channel is relatively clear. The Iran war has disrupted energy markets and global shipping routes, while higher oil, European gas prices, freight costs and tariffs have increased the risk that headline inflation accelerates again. Importantly, the concern is no longer limited to the immediate impact of higher energy prices, but whether these shocks pass through into core inflation, corporate pricing behaviour, wage demands and longer-term inflation expectations.
Across regions, the renewed inflation risk follows the same broad logic, but the transmission channels differ. In the US, the inflation impulse is less directly tied to natural gas because domestic production and the more insulated Henry Hub market provide a buffer, although higher crude oil still feeds into gasoline, transport, logistics and consumer expectations. In the euro area, the risk is more directly linked to energy security, as dependence on imported energy and LNG makes higher gas prices a more immediate pressure point for household bills, industrial input costs and fiscal support needs. More specifically, this led to rising inflation in both economies, as shown in Figure 3. US inflation rose by 90bps to 3.3%, while inflation in the euro area increased by 70bps to 2.6%. Inflation is likely to stay elevated in the near-term, as long as the war in Iran is not officially resumed. Due to the stickiness of prior inflation, inflation is likely not falling immediately. As a consequence, market participants expect one cut with a low probability and most likely no cut for the Fed interest rate in 2026, compared to 2-3 cuts before the Iran war. In Europe, the situation is even less clear with opinions ranging from rate cuts (low probability) to no changes or even multiple rate hikes.

Figure 3: Inflation in the US and Euro Area & Federal Fund Rate and ECB Deposit Facility Rate Since January 2025, Source: TradingEconomics, Federal Reserve & European Central Banks, April 2026

Labour markets remain important, but they are no longer the main policy variable in the way they were during late 2025. At that time, with inflation appearing more contained, central banks were increasingly focused on whether rising unemployment and softer hiring justified rate cuts. In 2026, the focus has shifted back towards inflation. Employment data still matters, especially because wage growth determines whether inflation becomes embedded, but central banks are now less likely to respond aggressively to labour-market weakness if inflation expectations are moving higher at the same time.
The growth impact is the other side of the same shock. Higher energy prices act like a tax on consumers and businesses, reducing disposable income, raising production costs and weighing on confidence. The US economy appears better positioned to absorb this pressure, supported by domestic energy production, stronger corporate balance sheets and more resilient demand. Europe is more vulnerable, given weaker underlying growth, higher imported energy exposure and limited fiscal flexibility. As a result, the macro environment has become more stagflationary in character. Inflation risks have risen, while growth momentum has become more fragile.
Equity markets entered 2026 on a relatively strong footing, although performance was uneven across regions. By the end of February, US equities were broadly flat, while Europe and China had gained around 5% and Japan had rallied by approximately 15%, supported by continued foreign inflows, corporate reform momentum and a weaker yen. The outbreak of the Iran war then triggered a sharp risk-off phase, as investors reassessed the impact of higher energy prices, supply-chain disruption, inflation risk and reduced central-bank flexibility. At the lows, US equities had fallen to around -7% YTD, Europe and China declined to roughly -5%, and Japan gave back almost all of its earlier gains. However, the correction proved relatively short-lived. At the time of writing, equity markets have rebounded strongly, with Japan up around 18% YTD, while the US, Europe and China are all up between 3% and 5%. Figure 4 shows the performance dynamics of 2026 thus far. This recovery suggests that investors have so far treated the Iran shock as a severe but manageable macro disruption rather than the start of a broader earnings recession, although equity markets remain highly sensitive to renewed escalation, energy prices and the path of policy rates.

Figure 4: Indexed Performance of the S&P 500, Euro Stoxx 50, Nikkei 225 & Shanghai Composite Since the Beginning of 2026, Source: Investing.com, April 2026

Cryptocurrencies also began 2026 strongly, extending the momentum from the prior year until early February, when the market entered a sharp correction. The sell-off was mainly driven by broader risk-off sentiment across technology and high-growth assets, ETF outflows, weaker institutional demand and the unwind of leveraged positions, rather than a crypto-specific structural shock. At the lows, Bitcoin had fallen by around 30% YTD, while Ethereum and Solana declined by roughly 40%, reflecting the higher beta of altcoins in periods of tighter liquidity. Until early April, cryptocurrencies remained close to these depressed levels, with the Iran war having only limited additional impact. Since then, digital assets have rallied alongside equities, supported by improving risk sentiment and hopes of geopolitical stabilisation. At the time of writing, Bitcoin is down only around 10% YTD, Ethereum remains down around 20%, while Solana has failed to fully join the rebound and is still down roughly 30%.

Figure 5: YTD of Bitcoin, Ethereum, and Solana, Source: CoinMarketCap, April 2026

Hedge Funds
Hedge funds entered 2026 with strong momentum after a solid 2025, supported by improved performance, renewed investor confidence and a more attractive opportunity set across rates, commodities, currencies and equities. However, the escalation of the Iran war in March created the first major stress test of the year, as the energy shock, inflation repricing, higher-rate expectations and equity-market sell-off pressured performance across the industry. Hedge funds were not immune to this volatility, particularly those with higher equity beta, exposure to crowded risk trades or leverage-sensitive positions. However, the drawdown was still more contained than many directional risk assets, reinforcing the role of hedge funds as a potentially stabilising allocation in more uncertain market environments. Rather than undermining the broader case for the asset class, the March episode highlighted the importance of manager selection, risk management and the ability to adjust exposures quickly during periods of geopolitical stress.
Despite the March drawdown, investor demand for hedge funds has remained resilient. This is important because it suggests that allocators are not viewing recent volatility as a reason to reduce exposure, but rather as confirmation that flexible, actively managed strategies remain useful in a more complex macro environment. Higher inflation uncertainty, unstable rate expectations, geopolitical shocks and greater cross-asset dispersion all support the institutional case for hedge funds, particularly when traditional equity-bond diversification is less reliable. Industry flows have remained positive, with capital continuing to favour managers that can demonstrate downside control, differentiated alpha and liquidity. At the same time, April results are expected to be strong, helped by the rebound in equities and improving risk sentiment. In short, hedge funds suffered during the March shock, but the industry has so far retained investor confidence and appears well positioned to benefit from a more volatile market regime.
Strategy dispersion has become one of the key themes of 2026. Equity hedge and emerging-market strategies were among the more exposed areas during the March sell-off, as risk assets declined and geopolitical uncertainty weighed on investor sentiment. However, equity long/short managers may also benefit from the sharp regional and sector dispersion that has followed, particularly across Japan, China, Europe, energy, defence and technology. Macro, commodity and credit-oriented strategies appear especially relevant in the current environment, given large moves in oil, European gas, precious metals, currencies, yield curves and credit spreads. These conditions create opportunities for skilled managers to monetise dislocations, relative-value trades and directional trends. At the same time, the environment is not uniformly favourable. These include sharp reversals in commodities, policy-sensitive rate moves and crowded positioning can quickly turn opportunities into drawdowns. Overall, 2026 has rewarded flexibility and active risk management more than static market exposure.

Private Equity & Venture Capital
Private equity entered 2026 with a more constructive backdrop, but the recovery remains selective rather than broad-based. After a difficult period in 2024 and 2025, dealmaking and exit activity have improved, helped by more stable financing markets, greater valuation realism and renewed buyer confidence. However, the recovery is still concentrated in larger, higher-quality assets, while mid-market transactions and more leveraged deals remain more difficult. The central bottleneck continues to be exits and distributions. Many limited partners are still waiting for cash to be returned from older vintages before committing more aggressively to new funds, which keeps fundraising pressure elevated, especially for smaller and less established managers. As a result, private equity is no longer frozen, but it has not returned to the easy conditions of the previous cycle. Overall, activity has gained traction but remains uneven and constrained by persistent liquidity issues.
The IPO market has become the main source of optimism for both private equity and venture capital, as a more active listing environment could help unlock distributions, validate private-market valuations and rebuild LP confidence. However, the reopening remains highly selective. Large, profitable or strategically important companies are best positioned to access public markets, while smaller businesses and companies with weaker profitability profiles may still struggle to list on attractive terms. This is particularly relevant given the expected pipeline of large private companies, including names such as SpaceX, OpenAI and Anthropic, which could materially improve sentiment if successful. At the same time, very large IPOs may absorb a significant amount of available public-market capital, making the market less supportive for less prominent issuers. The key point is therefore that the exit window is improving, but it is still concentrated in high-quality and large-cap opportunities rather than representing a full reopening of public markets.
Venture capital has shown the strongest headline recovery, but the improvement is overwhelmingly driven by artificial intelligence. As shown in Figure 6, global VC deal value reached a record $330.9bn in Q1 2026, largely supported by AI megadeals, while the US alone attracted $267.2bn of VC investment with a striking concentration during the quarter. OpenAI raised $122bn, Anthropic $30.6bn, xAI $20bn and Waymo $16bn, meaning that a small number of AI-related companies accounted for a very large share of total market activity. It is also noteworthy that total deal volume fell to the lowest levels since the beginning of 2020. This makes the VC recovery more fragile than the headline figures suggest, as many non-AI startups, later-stage companies and businesses without clear profitability paths still face a difficult fundraising and exit environment. Overall, private markets are reopening, but 2026 is not a broad return to the 2021 boom. Instead, capital is flowing disproportionately towards the largest, highest-quality and most strategically important assets.

Figure 6: Quarterly Venture Capital Deal Value Since Q1 2020 to Q1 2026 & Share of Large AI Deals in Q1 2026, Source: KPMG, April 2026

Private Debt
Private debt entered 2026 with its structural growth story still intact, supported by bank retrenchment, borrower demand for flexible capital, floating-rate income and institutional appetite for yield. However, the tone around the asset class has become more cautious since the beginning of the year. Instead of focusing only on continued AUM growth and the migration of lending activity from banks to private markets, investors have increasingly shifted their attention towards underwriting discipline, valuation transparency, liquidity terms and the quality of underlying borrower portfolios. This does not suggest that private debt has entered a broad crisis, but it does mark a clear change in narrative. The asset class remains attractive in a higher-rate environment, yet 2026 has become an important stress test for whether private credit can deliver stable returns while operating with less favourable macro conditions, rising refinancing pressure and greater scrutiny from investors and rating agencies.
The key headline has been redemption pressure in semi-liquid private credit vehicles, most notably at Blue Owl, where investor withdrawal requests highlighted the tension between illiquid direct-lending assets and fund structures offering periodic liquidity. This has become one of the clearest pressure points in the market, as private credit assets are typically long-term and difficult to sell quickly, while some newer wealth-channel products have created expectations of more regular access to capital. Figure 7 shows the share price performance of listed private credit managers, including Blue Owl, Ares, Apollo and Blackstone. While the recent market recovery has helped, several private credit-related companies remain down around 20% to 40% from their prior levels, leaving them far below where they traded before the current private credit stress emerged. The chart therefore captures not only company-specific concerns, but also a broader repricing of liquidity, transparency and credit-cycle risk across the sector.

Figure 7: YTD Performance of Selected Publicly Traded Private Credit Focused Companies, Source: Investing.com, April 2026

At the same time, credit quality concerns are rising, although the market has not yet moved into a broad default cycle. Higher rates, slower growth, tighter refinancing conditions and pressure on more leveraged middle-market borrowers are increasing the risk of restructurings, maturity extensions and distressed exchanges. Software exposure has also become a more specific concern, as AI disruption may weaken the growth outlook for some recurring-revenue borrowers that were previously viewed as relatively defensive. Banks remain indirectly exposed through fund finance, leverage facilities and lending relationships with non-bank credit platforms, although the risk still appears more contained than systemic. Fundraising has remained resilient, but investors are becoming more selective, favouring larger managers with strong origination, conservative underwriting and credible workout capabilities. Credit secondaries are also becoming more important as a liquidity outlet, helping investors rebalance portfolios while potentially revealing valuation gaps. Overall, private debt remains structurally supported, but 2026 has exposed the difference between high-quality lending platforms and weaker, more liquidity-sensitive structures.

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ALTERNATIVE MARKETS UPDATE – MID APRIL 2026 & macroeagle by bobby vedral

Tue, 14 Apr 2026 12:22:48 GMT

RESEARCH PERSPECTIVE VOL. 273
April 2026

Alternative Markets Update

Over the past two weeks, the US–Iran conflict has shifted from a tentative stabilisation phase back into renewed escalation, reinforcing the fragility of any diplomatic progress. Following initial attempts to de-escalate through a temporary ceasefire and negotiations, the situation deteriorated quickly as violations emerged and trust between both sides eroded. Diplomatic talks ultimately failed, leading to a resumption of military activity centred around the Strait of Hormuz, including targeted strikes and increased naval presence. Most notably, the conflict has moved beyond isolated engagements towards a broader strategic confrontation, with measures aimed at disrupting Iran’s economic and energy infrastructure, significantly raising the risk of prolonged instability and further escalation across the region.
Over the same period, oil has been the key transmission channel into markets, but with an increasingly nuanced outlook. Prices initially surged on renewed escalation and supply disruption risks around the Strait of Hormuz, regularly moving and staying above the $100 per barrel threshold and reinforcing the inflation narrative. As shown in Figure 1, WTI crude oil gained nearly 100% at its peak compared to the beginning of the year with massive daily moves. While the forward-looking view even at the outset of the conflict was that this would represent a temporary spike, expectations have since shifted higher, reflecting the already longer-than-anticipated duration of the conflict and the likelihood of structurally elevated geopolitical risk. Consensus now points to oil declining again as flows normalise, albeit to a level above pre-conflict ranges. The critical variable for inflation is therefore not the spike itself, but its duration. If oil remains around or above $100 for a sustained period, second-round effects become more likely, whereas a relatively swift move back towards the $80 range would contain the broader inflationary impact and limit the need for a more aggressive policy response.

Figure 1: WTI Crude Oil YTD and Daily Gains and Losses since the Beginning of 2026, Source: Investing.com, April 2026

US inflation provided the clearest signal of the shifting macro backdrop, with the latest print coming in at 3.3% versus 3.4% expected, largely reflecting the pass-through from higher energy prices following the oil spike. Despite the slight downside surprise, the broader trend has reinforced a more cautious rates outlook, particularly as inflation risks remain skewed to the upside. At the beginning of the year, markets were pricing in around two rate cuts in the US for 2026. This has now fully reversed, with no cuts currently in sight – although this may evolve once Kevin Warsh assumes his position as Fed Chairman. While rate hikes are still not the base case, this hinges on inflation being contained and, crucially, on a moderation in long-end yields. As shown in Figure 2, US 10-year Treasury yields rose sharply during the conflict, peaking at around 4.5% from just below 4% previously, and have since eased slightly to 4.29%, but would likely need to fall closer to the 4% level for rate cuts to come back into consideration. A similar dynamic has played out in Europe, where yields have moved even more aggressively, with German 10-year Bunds rising from 2.65% to 3.09% and UK 10-year gilts from 4.27% to 4.84%, reflecting heightened inflation concerns and a broader repricing of the interest rate path across developed markets.

Figure 2: 10-Year Bonds Yields in the US, the UK, and Germany Since the Beginning of 2026, Source: Investing.com, April 2026

US equities have shown a notable degree of resilience over the past two weeks, recovering from initial declines and moving back towards pre-conflict levels, as shown in Figure 3. Yet, the underlying market structure has become increasingly narrow and fragile. While headline indices have stabilised, performance has been driven by a limited group of large-cap names, masking broader weakness across cyclicals and rate-sensitive sectors. This reflects a shift in investor focus away from macro uncertainty alone towards earnings durability, particularly in an environment of higher yields and persistent inflation risks. As a result, the market is now entering a more critical phase, where the sustainability of current valuations, especially in large-cap technology, will depend on the ability to deliver on expectations. With consensus still pointing to strong year-on-year earnings growth, the upcoming reporting season will be pivotal in determining whether recent equity resilience can be maintained or whether the market begins to reprice in line with the more challenging macro backdrop.

Figure 3: S&P 500 YTD and Daily Gains and Losses since the Beginning of 2026, Source: Investing.com, April 2026

Private debt is currently in a more fragile phase, with rising redemption pressure, tighter liquidity and growing scrutiny of valuations and underlying credit quality, particularly in software-heavy portfolios. While the market is clearly under strain and defaults are likely to rise further, the stress still appears concentrated in specific fund structures and borrower groups rather than signalling a broader systemic event. For institutional investors, this leaves private debt in an unusual position: near-term sentiment and liquidity dynamics have weakened materially, but the longer-term structural case remains intact, especially for scaled managers with stable institutional capital and the ability to deploy into wider spreads.
Private equity remains under pressure from weak exit activity, extended holding periods, high financing costs and persistent valuation gaps, all of which continue to slow capital recycling and weigh on sentiment. That said, the outlook has become slightly more constructive as the market begins to focus on a potentially stronger IPO pipeline, with SpaceX reportedly having filed confidently for a public listing and names such as OpenAI and Anthropic also seen as possible future candidates. Even so, the benefit to broader exit conditions is far from assured, as blockbuster IPOs are likely to absorb a large share of available capital and investor attention, which could leave smaller, less exceptional companies still facing a difficult path to market in an environment of tight financial conditions and elevated selectivity.

Macro Eagle: Views for April by Bobby Vedral

I - March RECAP
Despite Trump’s reassurance that Iran has been “totally defeated” (March 13) and that the US has “destroyed 100% of Iran’s military capability” (March 14), the ZERO % of Iranian capabilities that remains has managed to cause the “biggest energy-supply shock in history” (IEA).
As one meme stated: “April Fools Day is cancelled this year, because no made-up prank could match the sh1t going on in the world right now”.
While wondering why Mr Market is so relaxed (more below), worth noticing a few “behavioural patterns”: (1) Trump likes “drama” when markets are closed, like the Veny stunt on Saturday, Feb 3^rd; the Iran attack on Saturday, Feb 28^th; or the “48-hour ultimatum” on Saturday, March 21^st. (2) He then does a U-Turn or spreads positive news as soon as the trading week starts. (3) Iran on the other hand, likes to hit ships and targets on Wednesdays – right in the middle of it. The result: markets rise at the start of the week, then fall into the weekend as market participants de-risk. See graph below.
In other news: (1) On March 5^th the Chinese Communist Party announced its latest five-year plan, setting the lowest growth target ever while also vowing to become “the world’s primary AI innovation centre”. (2) On March 25^th a jury in California ruled against Meta/Google in the first social media addiction trial. (3) SpaceX kickstarted the IPO-rush, that might create some capital shortage this autumn (more below).

II – March TOP 10
(1) Oil prices in March saw their biggest monthly increase in at least the last 40 years – left graph. (2) Fiscal worries sent UK 10 year yields above 5%, last seen in 2008 – middle graph. (3) Korean equities saw their biggest ever 1-day fall on Wednesday, March 4^th – right graph. (4) Meta/Google lost the first ever social media addiction trial. (5) Gold, -12%, had its worst month in decades. (6) The IEA announced its largest oil reserve release ever: 400mb. (7) Various Asian currencies, including the IDR, INR and PHP sunk to record lows. (8) A US submarine torpedoed and sank an Iranian ship in Sri Lankan waters, a first since WW2. (9) China set its lowest growth target since 1991 at 4.5-5.0%. (10) Chuck Norris, the only man who could have re-opened the Strait of Hormuz, died. Or as one meme said: “If 2026 can kill Chuck Norris – the rest of us are screwed”.

III – April PREVIEW
The chart below should be pretty self-explanatory: Trump’s Iran deadline tomorrow and CPI on Friday the highlights of this week. Next week we have the IMF’s Spring meetings in DC and JPM kicking-off the Q1 earnings season. Week four is relatively quiet and then comes the last week bazooka: FOMC, GDP Q1 data and BigTech earnings.
All while we follow the Trump Show …

IV – On WAR & MARKETS
As mentioned above, broad equity markets have reacted remarkably calm despite the 60%+ rise in oil prices. Before I muse about the reason for that in the next section, here a few other observations: (1) As the middle graph shows, consensus expectations for S&P500 corporate earnings have continued to rise. Which means the fall in equities is driven by multiple contraction, reflecting uncertainty – which makes sense. That makes the upcoming Q1 earnings season especially important to follow. (2) The press is full of chatter that US bond yields have risen on the back of higher inflation worries. That’s not correct. Looking at the right chart, real rates have risen, while inflation break-evens have stayed largely flat. What seems to have driven bond yields higher are stimulus expectations and therefore fiscal worries.

V – Why are markets so RELAXED?
There are many reasons to fear the worst: (1) oil prices are up 60%+; (2) most energy industry experts expect a car crash; (3) Iran has the incentive to inflict max damage to the global economy as possible to deter future US/Israeli attacks; (4) the White House has deployed the 31^st MEU, 11^th MEU and 82^nd Airborne – which has a whiff of “boots on the ground”; (5) the Pentagon has asked Congress for $200bn to finance the conflict. Given that the first week cost $11bn, that means 20 weeks total. Wait. What?
So, here is my view of why Mr Market seems so relaxed: (1) TACO: Trump backs off every time US 10 yields hit 4.50. He also has a date with Xi in mid-May, by which time he may want to wrap this up. He can look for a win elsewhere: say Cuba. (2) Crying Wolf: Experts predicted Armageddon after “Liberation Day” one year ago. The opposite happened. Global trade grew 5% in 2025, markets rallied. (3) Congress won’t authorize the use of force beyond the 60-90 days allowed under the War Powers Resolution Act of 1973. (4) China/India might get Iran to open the Strait, which would put pressure on DJT to end the War. (5) Bailout syndrome: ever since the Great Financial Crisis, there has been a Fiscal or Fed Put whenever markets crash. Investors have learned that “bears sounds smart, but bulls make money”. (6) Supply elasticity is higher than expected: there are “workarounds” (KSA/Red Sea, suspension of Jones Act and Russian sanctions) and “alternatives” (mainly coal, shale, etc).
Bottom line: 15+ years of “bailout mentality” have created a dangerous incentive to stay “long risk”. As Charlie Munger used to say: “Show me the incentive and I’ll show you the outcome”.

VI – On Trump’s STRATEGY (or lack thereof)
As the memes below make clear, the market believes Trump either has no strategy or is making one up on the go. Which is probably true, as he constantly moves the goalpost: from “regime change”, to “removing (400kg of enriched) uranium”, to “opening the Strait”, to “destroying all ballistic missiles”, to “take the oil”, to “bomb [them] back to the Stone Age, where they belong”.
I think there is a good chance that Trump gets bored, declares victory (“We broke it. You fix it”) and goes home.
Here is why: (1) Iran is fighting an asymmetric war and has time on its side: it can inflict max pain on the world economy at minimum cost; its sensitivity to casualties is low; and like the Vietcong it does not have to win, it just needs to survive. (2) The US can claim partial victory having set Iran back a few decades in its military capabilities and even having achieved some sort of “regime change”: a military junta, the IRGC, seems to be in charge now. (3) It is not obvious what additional military action can achieve. As the reality of diminishing returns kicks in, the growing political cost makes it easier to see regime change in Congress this autumn than in Teheran.
The biggest losers will be the Gulf states, whose “business plan” (finance, expats & tourism) will need revisiting with an IRGC-led Iran at its border.

VII – On EUROPE
In March Europe made headlines for all the wrong reasons: (1) total geopolitical irrelevance – as it has no means to influence either way what is going on in the Gulf. (2) Yet another looming supply/energy crisis thanks to decades of self-important climate-change virtue-signalling instead of strategic risk management; (3) Local elections in Germany and France as well as a general snap election in Denmark and a referendum in Italy where the common outcome is less clarity and more fragmentation.
With all of this, and government debts at all-time highs (another risk management failure) no wonder bond markets have become nervous (right graph), fearing a repeat of the 2022 interventions playbook, especially in gas-dependent countries.
One can only hope that “it is darkest before dawn”. Britain thinking about drilling in the North Sea and Germany thinking about nuclear gives some hope. At the end of the day: “no energy = no industry = no independent decision making”, especially in a geopolitically contested world.

VIII – My BRO (= Binocular of Risks and Opportunities)
The main market drivers continue to be: the War (and its impact on corporate earnings, financial conditions and inflation); AI-Angst (winners/losers, China/US, software/private credit) and government finances (incl. risk of stimulus ahead of the mid-terms).
Combining the last two we might run into a “financing problem” this autumn. Here is why: (1) with SpaceX targeting to raise $75bn via IPO for a $1.75trn valuation and Anthropic/OpenAI probably probably wanting to do the same; (2) add $10trn of US treasury refinancing; (3) $2trn of budget deficit, i.e. new debt; (4) $2trn of gross corporate debt issuance - also largely AI capex related; and (5) account for the fact that the Gulf probably needs its money for capex/defence at home … and I would say “Houston, we have a problem”. .

IX – PORTFOLIO
The market reaction on March 31^st tells me this market wants to go up. The “Fear & Greed” indicator below is now a good contrarian indicator.
The problem is that any “relief rally” will be short-lived as the pre-War worries of AI disruption, private credit, tighter financial conditions, high energy prices and the uncertainty caused by the US midterms will return.
So – I’m sticking to my overall portfolio focused on European autonomy (infrastructure, energy and defence-related, conscious that there is a bubble in defence stocks); Latam (energy, minerals, consumer) as well as thematic allocation to Japan and Korea. Largely avoiding US BigTech, credit, duration and anything illiquid.
I wish you all a great APRIL and as always: MAY THE MARKET BE WITH YOU!
Bobby

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, Stone Mountain Capital LTD. Readers should refer to the Disclaimer.
Bobby Vedral
MacroEagle
E : info@macroeagle.com
M : +447899996595
Bobby is a macro-political analyst who runs his own fund MacroEagle. He is also the UK representative of the German Economic Council (Wirtschaftsrat Deutschland) focused on the German-British relationship post-Brexit. Bobby left Goldman Sachs in March 2018, where he was a Partner and Global Head of Market Strats. His previous responsibilities included Systematic Trading Strategies, eProduct and FX/EM Structuring. In his external functions he was Member of the ECB's FX Consulting Group. Before Goldman Sachs, Bobby worked at Deutsche Bank and UniCredit/HVB.
This perspective is neither an offer to sell nor a solicitation of an offer to buy an interest in any investment or advisory service by Stone Mountain Capital LTD. For queries or for further information around our research and advisory services please contact email: research@stonemountain-capital.com under Tel.: +442037228175.

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ALTERNATIVE MARKETS UPDATE – END MARCH 2026

Mon, 30 Mar 2026 22:08:53 GMT

RESEARCH PERSPECTIVE VOL. 272
March 2026

Alternative Markets Update

Over the past two weeks, the Iran war has entered a more intense yet increasingly fluid phase, characterised by sustained US–Israel airstrikes that have significantly degraded Iran’s missile and military infrastructure while leaving residual retaliatory capacity intact. More recently, however, the US has reportedly scaled back or suspended parts of its strike activity, coinciding with early-stage, indirect peace negotiations that are allegedly taking place, suggesting a potential tactical pause rather than a definitive de-escalation. At the same time, escalation risks remain elevated, with contingency planning for ground operations still on the table and ongoing proxy activity across the region reinforcing the threat of a broader multi-front confrontation. Strategic pressure on key infrastructure and maritime chokepoints persists, while conditions within Iran continue to deteriorate amid infrastructure damage and mounting humanitarian strain. Overall, the conflict appears to be transitioning from peak intensity towards a more uncertain phase balancing military pressure with tentative diplomatic engagement.
The escalation in the Iran war has had a tangible impact on global markets, primarily through the energy and risk sentiment channels. Elevated uncertainty around supply disruptions and maritime chokepoints has supported oil prices and reinforced inflationary concerns, while broader geopolitical risk has contributed to increased volatility across equities, FX, and rates. At the same time, intermittent signals of de-escalation, including the recent pause in US strikes and reported negotiations, have led to sharp, short-term reversals, creating a more fragmented and headline-driven market environment.
In this context, hedge funds have demonstrated their relative advantage, benefiting from tactical flexibility, cross-asset positioning, and the ability to monetise volatility. Recent performance data indicates strong gains among macro and commodity-focused managers, with some energy specialists reportedly generating outsized weekly returns (e.g., high single-digit gains driven by oil price moves). More broadly, discretionary global macro and multi-strategy funds have been well positioned to capture both directional trends and short-term dislocations, particularly across commodities, FX, and rates. This reinforces the role of hedge funds as effective allocators in geopolitically driven markets, where dispersion, volatility, and rapid narrative shifts create a more favourable opportunity set compared to traditional long-only strategies.
Energy markets have been the primary transmission channel of the conflict, with Brent and WTI crude oil surging by roughly 70% YTD, as shown in Figure 1. This is mainly driven by supply disruption risks, constrained tanker flows, and the strategic importance of Middle Eastern production and transit routes. The divergence across natural gas markets has been equally pronounced: European gas prices have risen nearly 100%, reflecting heightened import dependency and sensitivity to global LNG flows, while US natural gas is down around 20%, highlighting domestic oversupply and relative insulation from geopolitical shocks. This widening regional dispersion underscores a structurally fragmented energy landscape, where pricing is increasingly dictated by geography, infrastructure constraints, and exposure to global trade routes rather than purely underlying demand dynamics.

Figure 1: Crude Oil and Natural Gas Price Since January 2026, Source: Investing.com, March 2026

Precious metals have exhibited significant volatility following their earlier safe-haven rally, with gold retracing sharply from near-record highs at the end of February, declining by around 20% and now only marginally positive year-to-date. The move has been driven by investors retreating from gold amid concerns over rising cross-asset correlations in a downturn, alongside an increased preference for liquidity and cash reserves, which has reduced demand for traditional safe-haven allocations. Silver has seen even more pronounced swings, having briefly exceeded 60% gains in late January before reversing sharply and turning negative for the year, reflecting its higher beta and dual role as both a precious and industrial metal. Overall, the correction in both metals underscores a shift away from crowded defensive trades towards a more liquidity-focused and tactically driven market environment. Figure 2 shows the extreme swings in the commodities’ market alongside the performance of the largest cryptocurrencies.
Cryptocurrencies have shown a relatively resilient but synchronised pattern in recent months, with Bitcoin, Ethereum, and Solana moving largely in tandem through early February before entering a broader correction phase. During this downturn, Bitcoin proved comparatively defensive, experiencing less severe drawdowns than higher-beta assets such as Ethereum and Solana. Notably, since this initial decline, crypto markets have stabilised, with prices consolidating despite ongoing geopolitical tensions, including the Iran war, suggesting that much of the macro-driven repricing had already occurred earlier in the year and that the asset class is currently trading in a more balanced, range-bound environment.

Figure 2: Gold, Silver and Cryptocurrency (BTC, ETH, SOL) Prices Since January 2026, Source: Investing.com, March 2026

US equities entered the year on a relatively muted footing, with the Dow Jones Industrial Average briefly outperforming and rising around 4% by mid-February, while both the S&P 500 and the Nasdaq-100 faced early pressure amid growing concerns around AI-related spending, monetisation risks, and broader valuation sustainability in the technology sector. Since the onset of the Iran war, US equity markets have trended lower in a more gradual fashion, partially cushioned by intermittent stabilisation efforts and policy signalling from Donald Trump. Nevertheless, the overall direction has remained negative, with the Nasdaq now down more than 10%, the S&P 500 approximately 7% lower, and the Dow Jones declining around 6%, reflecting a combination of geopolitical uncertainty, risk-off sentiment, and continued repricing of growth expectations. Figure 3 shows the performance of US equities in 2026 so far.

Figure 3: Dow Jones, S&P 500, and Nasdaq Index Since January 2026, Source: Investing.com, March 2026

Inflation dynamics in the US are beginning to shift again, with headline inflation currently at 2.4% and expectations for March rising to around 2.9%, signalling renewed upward pressure on prices. Should the Iran war persist, inflation is likely to re-accelerate further, driven primarily by higher energy costs and second-round effects across supply chains. Against this backdrop, the policy narrative has moved away from rate cuts towards a renewed discussion of potential rate hikes, reflecting concerns over inflation persistence. This shift is increasingly visible in rates markets: While the 3-month US Treasury yield has remained broadly stable throughout 2026 so far, the 10-year yield has risen by nearly 50bps, indicating a repricing of long-term inflation expectations and a structurally higher-for-longer interest rate outlook. Figure 4 provides more context about the Treasury yield developments in 2026 thus far.

Figure 4: US Treasuries and Inflation (Expectations) January 2026, Source: Investing.com, March 2026

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ALTERNATIVE MARKETS UPDATE – MID MARCH 2026

Thu, 12 Mar 2026 23:22:33 GMT

RESEARCH PERSPECTIVE VOL. 271
March 2026

Alternative Markets Update

The current war with Iran began in late February 2026, when the United States and Israel launched a coordinated military campaign targeting Iran’s nuclear programme, missile infrastructure, and senior leadership. The opening phase of the conflict resembled a decapitation strategy, with early strikes reportedly aimed at eliminating key political and military decision-makers in order to disrupt Iran’s command structure and weaken the regime’s ability to coordinate a response. Following these initial attacks, the campaign transitioned into a broader air superiority and strategic degradation effort, involving sustained strikes against military installations, missile launch sites, and critical infrastructure across the country. Iran subsequently retaliated with ballistic missiles and drones targeting Israel and U.S. military assets across the region, turning the confrontation into a sustained exchange of strikes rather than a limited punitive operation. As regional actors and Iranian proxy forces became increasingly involved, the conflict has gradually regionalised into a wider Middle Eastern confrontation, raising concerns about broader geopolitical escalation and potential disruptions to energy markets and global trade routes.
A key geopolitical risk emerging from the conflict concerns the Strait of Hormuz, one of the world’s most strategically important maritime chokepoints. The narrow waterway connects the Persian Gulf with global shipping routes and is estimated to handle roughly one-fifth of global oil trade, making it critical for energy markets and global supply chains. As tensions escalated, Iran signalled its willingness to disrupt traffic through the strait, including attempts to deploy naval mines and threaten commercial vessels operating in the region. Such actions reflect a long-standing element of Iran’s strategic doctrine, which views the ability to interfere with Hormuz shipping as a powerful deterrent and bargaining tool in times of conflict. Any sustained disruption to the strait would have immediate implications for global oil prices, shipping insurance costs, and broader financial markets, given the concentration of energy exports from Gulf producers that pass through this corridor.
Oil markets have been closely monitoring the conflict given the disruption to supply from the Persian Gulf. In response to rising geopolitical risks, OPEC announced production increases aimed at stabilising global supply and preventing a sustained spike in crude prices. At the same time, the International Energy Agency (IEA) coordinated the release of around 400 million barrels of oil from strategic reserves among member countries. These measures are intended to offset supply disruptions and reassure markets that sufficient emergency buffers exist. Figure 1 shows the steady price increase of oil ahead of the start of the war and the subsequent spikes and drops. Naturally, prices have been extremely volatile. In spite of the steep disruption of oil flows, oil prices have soared “only moderately”, due to a combination of increasing oil supply from other sources and a reassuring rhetoric from the US that the war will be over soon; thus, only affecting the global economy in the short-term.

Figure 1: WTI Crude Oil Prices Since January 2026, Source: Investing.com, March 2026

Equity markets have also reacted unevenly to the escalation, reflecting differing regional exposure to energy supply risks. As shown in Figure 2, US equities have shown comparatively limited downside, falling by roughly 2% since the start of the war, despite having already struggled earlier in 2026. This relative resilience partly reflects the United States’ greater energy independence, as domestic oil production reduces its vulnerability to disruptions in Middle Eastern supply. By contrast, European equities, which had begun the year on stronger footing, have declined by nearly 6% since the conflict began, reflecting the region’s higher dependence on imported energy. Asian markets experienced the sharpest initial reaction, with Japan temporarily falling more than 10% and still trading around 7% lower, while Chinese equities have shown a more muted response, currently down only around 1%.

Figure 2: Impact of the War in Iran on Global Equities, Source: Investing.com, March 2026

Periods of geopolitical instability such as the current conflict tend to highlight the diversification role of hedge funds within institutional portfolios. Their ability to dynamically adjust exposures and capture relative value across asset classes allows them to benefit from volatility and market dislocations, rather than being fully exposed to broad equity drawdowns. Strategies such as global macro, CTAs, and multi-strategy funds are particularly well positioned to navigate sharp moves in commodities, currencies, and rates that typically accompany geopolitical shocks.
In contrast to public markets, private credit has so far shown limited immediate reaction to the recent geopolitical escalation. The asset class is generally less sensitive to short-term market volatility, as valuations are driven primarily by borrower fundamentals and contractual cash flows rather than daily market pricing. As a result, the direct impact of the conflict on private credit portfolios has remained relatively muted to date.
Recent developments suggest growing stress signals in parts of the private credit market, particularly among highly leveraged borrowers facing elevated financing costs. An increasing number of companies have resorted to loan restructurings, payment-in-kind (PIK) interest, and liability management exercises to manage debt burdens. As a result, some market participants argue that headline default rates may understate the underlying level of credit stress, as troubled loans are often amended rather than formally defaulted. These dynamics point to a more challenging phase of the credit cycle, particularly for weaker borrowers that relied on aggressive capital structures during the period of abundant liquidity.
At the same time, investors have become increasingly concerned about liquidity and valuation transparency within parts of the private credit ecosystem, particularly among large asset managers with significant retail exposure. Recent market developments have highlighted these risks, with Blue Owl Capital reportedly halting redemptions in one of its private credit vehicles, raising questions about liquidity management in semi-liquid structures. The company’s publicly traded shares have also come under pressure, declining by roughly 43% so far in 2026, while several other listed private credit managers have experienced similarly sharp drawdowns during the year. These developments have intensified the debate around whether the rapid expansion of the asset class in recent years may have masked underlying credit risks and valuation pressures.
Despite these concerns, the structural growth drivers of private credit remain firmly intact. Continued bank retrenchment, regulatory capital constraints, and strong demand from private equity sponsors continue to support the role of private lenders in corporate financing. At the same time, institutional investors remain attracted to the asset class due to its floating-rate income profile and relatively stable cash flows compared to traditional fixed income. As a result, while the market may enter a more selective phase with greater scrutiny on underwriting standards and credit quality, private credit is expected to remain a key component of institutional portfolios.

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