Back to the 1970s? Investors brace for return of stagflation

LONDON: Investors are preparing for the possibility that war in the Middle East could spark a stagflationary shock reminiscent of 50 years ago, when disrupted global energy supplies sent inflation soaring and battered growth.

“The risk of a 1970s scenario is rising,” RBC BlueBay Asset Management portfolio manager Kaspar Hense said on Monday, after oil topped $100.

“If there is another extended war, with oil prices going up significantly further, then the safe-haven status of government bonds are at risk...