Mark Dowding, chief investment officer for fixed income at RBC Bluebay Asset Management, is warning that Europe could face recession if the Strait of Hormuz crisis isn't resolved within a month. The remarks signal escalating concern among institutional investors about the economic fallout from Middle East geopolitical tensions.

The Strait of Hormuz serves as a critical artery for global oil shipments, with roughly a fifth of the world's petroleum passing through the waterway. Any sustained disruption to tanker traffic through this chokepoint would severely constrain energy supplies to European markets, driving up costs across the broader economy at a vulnerable moment.

Dowding's recession warning comes as European markets already navigate a challenging environment marked by persistent inflation pressures and tight monetary policy. An energy supply shock triggered by the Hormuz situation would compound these existing headwinds significantly.

For fixed income investors, the implications are substantial. A recession driven by energy disruption could force central banks to recalibrate their policy trajectories, potentially creating opportunities in sovereign bonds while compressing corporate credit spreads.