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HSBC analysts Janet Henry and Bethan Ellis highlight the profound economic risks associated with a potential 12-week closure of the Strait of Hormuz, emphasizing a growing disconnect between resilient equity markets and wary bond markets. While strong earnings support equities, bond markets are increasingly reacting to the dual threats of persistent inflation and diminished growth. In light of these risks, HSBC has revised its Brent crude forecast upward to $95 per barrel and anticipates rate hikes from the ECB, BoE, and various emerging market central banks. The institution's core thesis advocates for a proactive 'stitch in time' approach, urging central banks to act immediately as insurance against long-term supply-side pressures. This strategic shift is designed to avoid repeating the policy errors observed in 2022, focusing on early intervention to manage inflationary volatility. Ultimately, HSBC’s research underscores a cautious outlook where geopolitical disruptions necessitate aggressive monetary responses to stabilize global markets.

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