JPMorgan, Pimco Warn Bond Market Underestimates US-Iran War Slowdown Risk

Wall Street's leading bond-fund managers at JPMorgan Chase & Co. and Pacific Investment Management Co. (Pimco) are signaling that financial markets are not adequately pricing in the risk of a sharp economic slowdown due to the ongoing US war in Iran. While equity markets have exhibited volatility, these firms believe the bond market remains overly optimistic, failing to fully account for the potential depth and duration of the conflict's economic impact. They suggest that supply chain disruptions and surging energy prices linked to the war are likely to cause a more severe contraction than current bond yields indicate, urging investors to prepare for a potential hard landing. ## Latest Update The warning comes as the US economy shows signs of fatigue, with manufacturing indices falling and consumer confidence reaching multi-year lows, exacerbating concerns about an already sputtering economy. Analysts highlight that the bond market has yet to fully factor in the long-term fiscal strain caused by the escalation of hostilities. ## Timeline * **2026-03-29:** JPMorgan and Pimco analysts suggest the bond market is underestimating the risk of a sharp economic slowdown due to the US war in Iran, citing supply chain disruptions and energy price spikes. * **2026-03-29:** JPMorgan and Pimco warn that the bond market has yet to fully account for the long-term fiscal strain and supply chain disruptions caused by the escalation of hostilities, as the US economy shows signs of fatigue. ## What to Watch * Monitor leading economic indicators (manufacturing indices, consumer confidence) for further signs of a slowdown. * Track developments in the US-Iran war, particularly regarding supply chain disruptions and energy price fluctuations. * Assess the Federal Reserve's response to potential economic weakness and its impact on bond yields.