Global markets are experiencing a dramatic shift in narrative as inflation concerns resurface following the US-Israeli strikes on Iran. Oil prices surged alongside shipping costs and commodity prices, while the ISM report showed input prices hitting their highest level since 2022. This marks a sharp reversal from recent weeks when AI-driven deflation dominated market thinking.

Beyond immediate geopolitical shocks, deeper structural changes in global capital flows are emerging. ECB President Christine Lagarde highlighted how Europe's traditional model of exporting savings and relying on external demand is becoming less viable. Major surplus countries including the EU, Japan, and China are increasingly redirecting capital inward, potentially reducing the flow of funds that has long supported US markets.

The implications extend beyond immediate price movements. As Macquarie strategists note, war and national sovereignty concerns create environments where higher prices don't dampen activity but rather incentivize more hoarding and spending. This "age of hoarding" combined with structural shifts in global savings patterns suggests a fundamental change in how capital moves globally, potentially leading to higher real rates and tighter liquidity in the years ahead.