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Global equities face fragile outlook as energy and yields stay a risk
National Bank of Canada strategists pointed to depleted oil inventories and refining-margin strength, alongside generational-high government bond yields, as key vulnerabilities for equities.
National Bank of Canada strategists said global equities, including the MSCI ACWI, remain on track for another positive quarter, aided by an August rebound, but warned the overall path is fragile.
FXStreet cited NBC’s view that strained traffic in the Strait of Hormuz is not yet normalized, with oil and liquid-fuel inventories being depleted and supply-chain pressures building, factors that could intensify energy price risk as the conflict continues.
NBC also tied equity vulnerability to a higher-yield environment, noting that government bond yields are already at generational highs and that any renewed inflation shock could be particularly challenging for equities.
The strategists pointed to 30-year government bond yields reflecting lingering inflation concerns, large fiscal deficits, rising public debt, and heavy sovereign issuance across major economies, which they said is contributing to a higher term premium.