Business Costs Surging Amid Iran War, Says JPMorgan Strategist

JPMorgan strategist David Zervos highlighted rising business costs driven by escalating geopolitical tensions in Iran, citing disruptions to energy supply chains and heightened regional instability. The surge in input costs is amplifying inflationary pressures, prompting markets to reassess near-term interest rate trajectories as central banks may delay easing cycles. This repricing of rate differentials is weighing on rate-sensitive assets, particularly long-duration equities and high-yield bonds, while boosting demand for safe-haven instruments and energy commodities. Investors are also recalibrating exposure to emerging market debt with regional risk premiums expanding. The upcoming U.S. CPI release will be a key catalyst, as hotter-than-expected data could reinforce the Federal Reserve’s hawkish stance amid renewed inflation concerns.

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