The strikes in Iran and across the Middle East carry severe human consequences for the region. For the markets, the key question concerns the potential impact on oil prices, inflation, growth and asset pricing.

Globally, yields on high-quality assets feel thin once adjusted for inflation and tax. Corporate balance sheets look sound, yet spreads are tight and carry is limited. Under such circumstances, emerging market debt offers a clear payoff profile. There is income and promising potential for capital gains through policy easing, currency strength, and credit improvement. The asset class is broader and deeper than a decade ago, with stronger institutions in many countries and a larger local investor base. That mix supports resilience through shocks.

The International Capital Market Association (ICMA) recently introduced the Climate Transition Bond label under its Principles, to channel capital towards projects that support the decarbonisation of high-emitting sectors, in line with the goals of the Paris Agreement. Representing a logical and necessary evolution in sustainable fixed income markets, the label's success will depend on disciplined execution and investor confidence.