Reuters interviews ING’s Chris Turner on the market impact of the Iran war, higher oil prices, and rising bond yields. His view is that equities can still grind higher for now because leadership is concentrated in a few AI stocks, while inflation risk from energy should keep central banks hawkish and limit any disorderly jump in long-end yields.
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Chris Turner’s core argument is that the recent rise in bond yields is not yet enough to derail the equity rally. He says equities are still “powering ahead,” but the advance is increasingly narrow, with the S&P 500’s advance-decline line weakening and only a few large stocks doing most of the heavy lifting. In other words, he sees a fragile market structure, but not an immediate reversal. The main macro risk he emphasizes is energy-driven inflation from the Iran conflict. Turner says bond markets may not be fully pricing how far oil can go, and if energy prices stay elevated, inflation could move from roughly the 4% area toward 5% or even 6% on both sides of the Atlantic. Natural gas has not surged as much, but he keeps returning to oil and Brent as the key transmission channel. That setup, in his view, should keep central banks in hawkish mode. He does not expect U.S. …
Near term, the market can still hold up, but elevated oil is the key tactical risk because it can keep inflation prints hot and central-bank rhetoric hawkish. The immediate threat is a more fragile equity tape under the surface if a narrow group of stocks stops leading.
Over the next several weeks to months, the base case is a hawkish Fed and only moderate further upside in Treasury yields unless energy stays high for longer. If inflation keeps accelerating, rate-hike discussion could re-enter the market narrative later in the year.
Structurally, the interview points to a world where geopolitical energy shocks keep inflation and policy hawkishness more persistent than in the low-rate regime. The lasting vulnerability is market concentration in a few growth/AI winners, which makes the equity market less resilient to any leadership break.
Higher bond yields have not yet been enough to stop the equity rally.
He says equities are still powering ahead despite the rise in yields.
The equity rally is becoming narrower and more dependent on a few big AI stocks.
He cites the S&P advance-decline line falling away and the role of a few big names.
If energy prices stay elevated, inflation could rise from around 4% to 5%-6% in the U.S. and Europe.
He says adverse scenarios emerge if energy does not come down quickly.
Will higher bond yields eventually take the wind out of the equity market?
Chris Turner argues we're not there yet — bond yields have risen but equities are still powering ahead, and the rally is increasingly narrow (a few big stocks). He says as long as central banks are prepared to react to inflation, the long end of the bond market can be contained with no immediate reversal in the equity rally.
Do you think bond markets still aren't pricing in how high energy prices could go given the Iran war talks?
Turner says that's the risk — if energy prices stay elevated without going higher, inflation could move from just above 4% toward 5-6% on both sides of the Atlantic. He argues we need energy prices to come lower quickly, otherwise hot price data will keep central banks in hawkish mode.
Are you expecting US bond yields to tip quite a bit higher still given the Fed's hawkish commentary?
Turner says not yet — 10-year treasuries around 4.50%, outside risk to 4.75%. He thinks the Fed will shift hawkish, with the key market focus being the Fed dropping its implicit easing bias. He notes Christopher Waller's recent comments that near-term rate hikes aren't warranted but if energy prices stay high, hikes could be on the agenda later.
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