For decades, investors have relied on a simple market correlation. When stock prices fall, government bond prices rise. The premise was the backbone of the classic 60-40 balanced portfolio.
But BlackRock is now warning that this relationship is breaking down—and the reason lies in a mix of geopolitics, energy shocks, and stubborn inflation.
In the latest market note, the world’s biggest asset manager has looked into the center of today’s market stress – the Strait of Hormuz, a critical chokepoint for global oil and LNG flows. With shipping through the Strait severely disrupted, the world is facing more than just higher prices.
It’s a genuine supply shock. Oil has surged back toward $100, and the knock-on effects are spreading through supply chains, raising production costs and feeding inflation.
Since energy touches nearly every part of the economy, this kind of disruption creates a difficult environment. Growth slows while inflation rises.
Why This Time Is Different
BlackRock sees a feedback loop at work. Rising prices increase political and economic pressure, which could eventually limit the conflict, but in the near term, the risk …
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