Iran conflict reshapes central bank outlooks

• The energy shock from the Middle East conflict has reset the outlook for central banks globally, with UK rate expectations taking the hardest hit. • The conflict has amplified the UK’s vulnerability to inflation relative to the US, potentially stripping the Bank of England of the near-term easing the UK economy badly needs while leaving the Federal Reserve's room for manoeuvre comparatively intact. • The pattern of US Treasuries failing to hedge risk market downturns is becoming more frequent. TwentyFour thinks it is harder to assume government bonds will effectively dampen portfolio volatility...