Markets have moved from pricing a temporary oil shock to stagflationary concerns, driving yields sharply higher with bonds under pressure. Crucial factor is duration of oil flow disruption via Strait of Hormuz; oil has scope to move meaningfully higher.

Current oil flow disruption is multiples of the 2022 shock, suggesting a retest of the $140 Brent high. Oil market is at all-time tightness (steep backwardation). Key question is when demand destruction kicks in or if G7 strategic reserves cap prices.

Seeing a bid for higher quality exposures and an unwind of popular carry trades. Environment favors defensive posture and floating rate exposures in a higher-for-longer yield backdrop.

Markets have gone too far pricing rate hikes (2-3 in UK/Europe). Dynamics differ from 2022: inflation is nearer target, growth is more precarious, fiscal challenges limit central bank capacity to fight a supply shock. Expect an extended pause from policymakers.

Biggest risk is global growth dynamics. Knock-on spillovers to European recovery and China's current account. US is more insulated as a net energy exporter. Risk depends on duration of disruption; European natural gas could run further.

Premature to declare stagflation, but risks are rising. January payrolls distorted by strikes/weather; trend hiring is steady. Stagflation risks become more pronounced the longer oil stays high, pressuring financial markets and the wealth effect.

Yes, fundamentals remain intact. Seeing rotation from cyclical winners to defensive players in energy/security and high-quality tech.