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In the past month in financial markets has been dominated by renewed tensions in the Middle East, impacting energy prices and credit markets. Such events heighten volatility, but we assess that the macroeconomic implications are a contained extension of existing stagflationary pressures rather than a break in the economic cycle. While oil prices have seen a short run spike, the nature of today’s oil shocks and the structure of the global economy argue for caution rather than alarm. Geopolitical crude spikes tend to revert because supply disruptions trigger compensatory responses: higher output from unaffected producers, drawdowns from strategic inventories and demand adjustments by consumers and industry. With global activity still resilient, the current oil move looks more like a continuation of inflationary frictions than the start of a new regime.

A second theme has been rising tension in private credit markets. After years of rapid expansion, the asset class is experiencing its first meaningful period of turbulence, seen in more selective underwriting, wider performance dispersion and a more cautious investor stance. We view this not as a structural failure but a necessary maturation phase for a young market. Public credit markets, by contrast, remain broadly calm, with modest spread widening and no significant signs of systemic stress. Taken together, these developments suggest that volatility risks have risen—typical when geopolitics intersects with a late cycle expansion—but they do not signal a break in the underlying cycle.

We believe the defining feature of the current stage is capital expenditure (CapEx) is taking the baton from consumers and governments. Household consumption has normalised after its post pandemic surge, fiscal impulses are fading, and corporate investment has become a more powerful engine of global activity. Much of this momentum is linked to artificial intelligence (AI), a transformative trend requiring vast physical infrastructure. Data centres need power capacity, cooling systems, specialised hardware and advanced manufacturing inputs; AI’s diffusion lifts investment in cloud infrastructure, semiconductors, high performance networking and expanded energy generation. This evolution is markedly physical in its investment demands.
As a result, beneficiaries of this CapEx cycle extend well beyond technology. Industrials, power producers, energy infrastructure and commodity suppliers are seeing stronger demand. As Nicolas Gazin notes in this month’s market views section, this creates opportunities for emerging markets supplying key inputs and for small and mid-cap companies operating in specialised segments of revitalised supply chains. This rotation underscores that the economic cycle remains self-sustaining, with new drivers emerging as old ones fade, and that the investment landscape is broadening as equity leadership becomes less concentrated.

On the labour market effects of AI, Hans Bevers shows in this month’s focus section that disruption so far aligns with previous technological shifts. Over the past three years, occupational changes have proceeded at a pace comparable to developments following the adoption of the commercial computer in 1984 and the commercial internet in 1996.

In the macroeconomic and investment strategy section, Bénédicte Kukla, Grégory Steiner and Adrien Roure outline why markets are entering a period where volatility is a feature, not a flaw, and where distinguishing cyclical noise from structural opportunity is essential. The geopolitical backdrop will likely continue producing episodic shocks, but the economic engine—powered increasingly by corporate investment—remains intact. For investors, this argues for more diversification and risk management, maintaining exposure to sectors and regions benefiting from the CapEx cycle and viewing short-term dislocations as potential entry points. Fixed income markets must navigate tension between resilient activity and temporarily elevated inflation pressures, but the broader credit environment remains constructive.

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_{Monthly House View, 20.03.2026. - Excerpt of the Editorial}