Beyond the Noise - Markets, Iran, and Why Bonds Are Getting a Second Look

One of the biggest questions that we have been heard lately: What happens next with Iran, and what could it mean for markets?

The honest answer is that no one knows for certain. But what we can do is prepare thoughtfully rather than react emotionally.

One area we continue to watch closely is the bond market. With the 10-year Treasury nearing 5%, bonds are beginning to look more attractive than they have in years. Historically, starting yield has had a strong relationship with forward bond returns, which means today’s higher yields may create meaningful opportunity over the next several years.

That’s one reason we believe certain areas of fixed income deserve attention — particularly mortgage-backed bonds and multi-sector bond strategies. These investments may provide more income potential than cash sitting in the bank while also helping smooth out portfolio volatility during uncertain periods.

So how are some of our trusted investment partners thinking about the conflict and its potential impact?

If tensions ease soon…

A quicker resolution could lead to lower oil prices, easing inflation pressures and potentially lower interest rates. In that environment, markets may refocus on economic fundamentals, which many still view as relatively healthy.

If uncertainty lingers…

A conflict stretching several more months could bring increased volatility as consumers and businesses begin to feel the pressure of higher energy costs and slowing growth. Markets tend to dislike uncertainty, and this type of environment can create short-term swings.

If disruption becomes prolonged…

A longer-term energy disruption raises recession concerns globally, particularly for countries heavily dependent on energy imports. In that scenario, higher-quality bonds have historically served as an important stabilizer while risk assets face greater pressure.

The encouraging news is that the United States remains better positioned than many global economies because we are energy and commodity exporters rather than importers.

As always, periods of uncertainty can feel uncomfortable, but they also create opportunity. Our focus remains the same: staying disciplined, looking beyond the headlines, and positioning portfolios thoughtfully for both protection and long-term growth.

If you have questions about how today’s environment may impact your portfolio or whether bonds deserve a larger role in your plan, we’re happy to have that conversation.

Don't let the short term noise distract you from your long term goals and we will continue to bring you information that is Beyond the Noise.

Author: Brian Zellers

Published on 6/3/2026

Important Disclosure:

This commentary is for informational purposes only and should not be construed as personalized investment advice or a recommendation to buy or sell any security. All investing involves risk, including possible loss of principal. Economic forecasts and market expectations are subject to change and may not occur as anticipated. Please consult with your financial advisor regarding your specific situation.