The Big Three

1. Trump blockade and failed talks - long lasting effects

The US and Iran have failed to close a deal regarding the re-opening of the Strait of Hormuz. In response, Trump has announced a naval blockade of the Strait, with an intention of intercepting vessels heading to or from Iranian ports and clearing mines laid in the waterway. By doing this, Trump has threatened to cut off Iran's oil exports and end its practice of charging ships a toll to pass, stripping Tehran of the economic leverage it has held since the conflict began. Oil markets responded immediately, with WTI crude once again jumping above $100 a barrel after an 8% increase.

Beyond immediate oil market turmoil, the ripple effects are significant. Fertiliser and helium prices are also rising, threatening food production and semiconductor supply chains. The IEA (U.S. Energy Information Administration) has called this the worst energy shock in history, and the IMF and World Bank have signalled that they will cut their global growth forecasts.

Even if peace is restored, investors expect lasting damage. Bond yields, primarily driven by persisting inflation expectations and commodity prices, are unlikely to return to pre-war levels quickly. Oil and gas prices may stay elevated for some time, keeping the cost of everyday goods, from food to fuel, higher than before the war. Central banks, which would normally cut interest rates to support growth, will find it hard to do so while inflation remains high. In addition, if oil production in the Middle East is shut down for a prolonged period, restarting it takes months, not days — meaning supply shortages could persist long after a ceasefire is agreed. For investors, this points to a world where inflation stays stickier, interest rates stay higher for longer, and the economic outlook remains more uncertain than markets had hoped at the start of the year.

2. Global bonds slide as failure of talks adds to inflation fears

Bond markets have been quick to reprice the new reality. The failure of peace talks and the subsequent blockade announcement pushed 10-year Treasury yields around 4.35% on Monday, reversing last week’s decline, with swap markets now pricing only a 20% chance of a Fed rate cut of 25bps by year's end. This is a dramatic shift from the two cuts expected before the conflict began. March's inflation data showed consumer prices rising at their fastest monthly pace since 2022, driven largely by the spike in energy costs, and the Fed now finds itself caught between high inflation and a slowing growth outlook.

For equity markets, this is a difficult backdrop as higher rates for longer reduce the present value of future earnings and lower prices, while the prospect of weaker consumer spending and industrial output weighs on corporate profitability. The question for investors is no longer whether the conflict will leave a mark on markets, but how deep and how lasting that mark will be.

Source: Bloomberg, Data as of 13/04/2026

3. Landslide victory in Hungarian general election

Away from the Middle East, one of the more surprising events came from Central Europe. Hungary’s general election delivered a landslide victory for the centre-right Tisza party leader Peter Magyar, ending Viktor Orbán's 16-year grip on power. Markets reacted immediately as the Hungarian forint surged 2.5% to a more than four-year high against the euro, and the Budapest stock exchange gained almost 3%, as investors priced in the prospect of billions of euros in frozen EU funds finally being released. Orbán's government had seen these funds withheld due to concerns over democratic standards and rule of law, and their release would provide a significant boost to Hungary's economy, funding infrastructure, healthcare and broader development. Magyar's two-thirds supermajority gives him a strong mandate to push through a sweeping anti-corruption drive, strengthen judicial independence, and rebuild Hungary's relationship with Brussels, which should also reduce the country's risk premium and attract greater foreign investment.

The geopolitical implications stretch well beyond Hungary's borders. Orbán had been a key ally of both Trump and Putin, and had repeatedly blocked EU efforts to support Ukraine, including a €90 billion loan to Kyiv. His removal shifts Hungary firmly back into the European mainstream, and German Chancellor Friedrich Merz was quick to note that EU decision-making on Russia would now become considerably easier. For European markets more broadly, it is a meaningful development as it reduces one of the European Union's most persistent internal fault lines at a moment when European unity has rarely mattered more.