Perspectives on The Energy Sector and Underlying Sub-Sectors

Energy cycles have a way of rewarding investors who show up early, while punishing those who assume the next upturn will look exactly like the last one. Supply disruptions caused by the war in Iran that began just under a month ago have upended markets globally, with oil markets taking center stage. My colleagues Kristian Kerr and Adam Turnquist have each written pieces this month digging into the physical oil market, “Assessing the Impact of Developments in Iran: Watch Energy” and “Oil in the Driver’s Seat as Geopolitical Tensions Rise”, r

As the U.S.-Iran conflict and de facto closure of the Strait of Hormuz enters its fourth week, market participants continue to search for some blue sky through the fog while remaining sensitive (in both directions) to fluid headlines flowing out of Washington and the Persian Gulf. While likely not comfortable for most investors, capital markets have generally reacted as one would expect given the major factors of the event — global equities faced downward pressure as oil prices surged and sovereign bond yields have moved higher as a result of energy-driven inflation worries. Yet an unlikely surprise has been gold.

The yello

Dollar Grows Stronger

The recent appreciation of the U.S. dollar (USD) against most currencies reflects investors’ assessment that the U.S. economy offers a uniquely strong combination of relative growth resilience, higher returns, and financial-system credibility. Compared with other advanced economies, the United States continues to exhibit firmer growth, a more flexible labor market, and a Federal Reserve (Fed) committed to price stability. At the same time, global uncertainty has reinforced demand for deep, liquid dollar‑denominated assets, which remain the primary source of safe and scalable collateral. As capital

Corporate credit markets have become unsettled about the potential for advanced agentic AI tools from firms such as Anthropic and OpenAI to automate functions across legal, analytical, marketing, and sales workflows, effectively targeting the software as a service (SaaS)/enterprise software space. Those concerns are highest within the private credit market, and that market is confronting its most meaningful stress test since becoming a dominant source of non ‑ bank financing, with an emerging wave of redemption pressure providing the clearest early signal of underlying liquidity mismatches. The suspension of redemptions across several large