The TwentyFour Blog

European bank results for the first quarter of 2026 have revealed a strong start to the year, allaying some of the concern that the prolonged conflict in the Middle East might impact bank fundamentals to some extent.

Credit markets have been remarkably resilient in the face of significant geopolitical and macroeconomic volatility in recent weeks.

With tensions in the Strait of Hormuz increasing over the weekend and markets getting used to oil prices well in excess of $100 per barrel, this seems an opportune moment to zoom out and look at the state of play in fixed income markets, considering the unsettling reality of a longer-than-expected conflict in the Middle East.

Last week, European regulators took another step in their long journey towards a single European banking regime, otherwise known as “banking union”.

Corporate hybrid issuance is on track for a record year in both Europe and the US, driven by expanding supply well beyond the traditional utilities, energy, and telecoms issuers.

European high yield (HY) credit, which had proved resilient to start 2026 despite growing concerns over AI risks, came under pressure in March as the Iran war disrupted global trade and weighed heavily on risk appetite.

Markets have entered another week with geopolitical headlines as the major driver of price action, and with uncertainty running high, we think the likelihood of spreads revisiting their tights of this year has reduced.

With no end in sight to the US-Israeli war with Iran, and tensions escalating once again over the weekend, investors are bracing for more volatility. Inflation fears have ramped up significantly, reflected clearly in government bond markets where rising yields show rate cuts being priced out and rate hikes increasingly being priced in.

Data published by the Bank of England (BoE) on Friday shows an interesting trend in consumers’ approach to interest rates.