Wall Street Bracing for US-Iran Talks | The Close 4/10/2026
Speakers
Summary
- The military conflict with Iran has "trumped everything" in markets, shifting focus from economic optimism to inflation and geopolitical risk, causing bond yields to rise and flatten the curve. (RJ Gallo)
- March CPI surged due to energy costs, but spillover into other components like food and airfares was more modest than expected; market-implied core inflation is priced for a sanguine path of 15-25 bps per month for the rest of the year. (Jon Hill)
- In fixed income, areas with higher spread volatility like high-yield and emerging market debt are less attractive; opportunities exist in niche areas like mortgage CMO floaters. (RJ Gallo)
- Private credit faces significant headwinds from wealth channel redemptions, which could persist for up to two years, slowing organic growth for firms like Blue Owl from ~20% to ~10%. (Alex Blostein)
- Within alternative asset managers, differentiation is key; firms like StepStone and Ares are preferred for their faster growth and value-driven models with less reliance on the challenged wealth channel. (Alex Blostein)
- U.S.-Iran negotiations have wide gaps on core issues (U.S. presence, Strait of Hormuz, nuclear program); success is uncertain and leverage depends on each side's willingness to use force or pay. (Gen. Wesley Clark)
- Bank earnings are expected to show stable credit, good consumer metrics, and strong investment banking fees fueled by record global M&A; the IPO pipeline (e.g., SpaceX) offers optimism for the rest of the year. (Macrae Sykes)
- The equity market may be "overshooting" on geopolitical news, pricing in a rapid resolution; however, lagged damage from the Strait of Hormuz closure and deglobalization trends will affect future earnings. (Dana D’Auria)
- Consumer-facing businesses note more caution but rely on loyal customer bases; experiential dining is key for restaurants, while packaged goods (e.g., jarred sauces) focus on holding price lines despite cost pressures. (Mario Carbone, Nathan Louer)
- Washington's focus is split between international affairs and domestic cost-of-living issues; the Fed confirmation process for Kevin Warsh is delayed by paperwork and a DOJ investigation into Chair Powell. (Kim Wallace)
Trade Ideas
Speaker stated they are "underweight" and "a bit more cautious in those areas with higher spread volatility like high-yield [and] emerging markets." The current environment of military conflict and macroeconomic uncertainty magnifies spread volatility, making lower-quality credit segments particularly risky. Avoid these asset classes due to elevated volatility and unpredictability driven by geopolitical events. A rapid and sustained de-escalation of geopolitical tensions, which would reduce market volatility and credit spreads.
Speaker rates Blue Owl as Neutral, noting its organic growth has been cut in half (from ~20% to ~10%) due to heavy reliance on the wealth channel, which is experiencing significant redemption requests in private credit. Private credit outflows from the wealth channel may persist for an extended period, directly impacting Blue Owl's largest growth engine, though underlying credit quality remains solid. Neutral stance reflects a significantly slowed growth trajectory offset by the lack of severe fundamental credit issues. A faster-than-expected recovery in wealth channel flows or a successful pivot to other fundraising verticals.
Speaker explicitly stated a preference to "lean" into StepStone and Ares due to their "faster growth" and "growth and value driven" models. These alternative asset managers have less reliance on the challenged wealth channel for private credit and are better positioned in institutional or other faster-growing market segments. Long due to superior growth prospects and business model differentiation within the asset manager space. A broader downturn in private market activity or spread widening that impacts all asset managers uniformly.
Up Next
This Bloomberg Markets video, published April 10, 2026, features RJ Gallo, Alex Blostein discussing HYG, EMB, OWL, StepStone, ARES. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: RJ Gallo, Alex Blostein · Tickers: HYG, EMB, OWL, StepStone, ARES