Once again, geopolitics have come to the fore, creating a swirl of possibilities for the world’s economies and shockwaves for the markets. The drama playing out in the Middle East is pushing energy prices higher, exacerbating what is now a widespread problem of perniciously above-target inflation.

With that context, the following points warrant consideration:

• As we noted in late 2022—when yields first returned to their currently higher, but historically normal range—over the long run, yield is, more or less, destiny.
• The Middle East conflict has helped lift yields to attractive levels.
• So, while it’s difficult to know when we’ve passed the peak of the current crisis in terms of yields and volatility, we are guardedly optimistic that most of the increase in rates is likely behind us.
• In that event, the market is well poised from current respectable yield levels to potentially deliver solid returns in the years ahead.