Markets are pulling back as investors reassess geopolitical risk following a U.S. address that offered little clarity on the path to resolving the Iran conflict.
BNN Bloomberg spoke with Christine Tan, portfolio manager at SLGI Asset Management, about how shifting expectations, oil volatility and central bank responses are shaping investor sentiment.
Key Takeaways
- Markets are reversing earlier optimism after the U.S. address delivered little new information, with declines reflecting reassessment rather than panic.
- Oil price movements are being driven by uncertainty and supply concerns, with sustained disruptions posing greater risks to growth and earnings.
- Investors are focused on whether the conflict remains short-lived or leads to lasting damage to energy infrastructure and supply chains.
- Market performance is being shaped by expectations around oil persistence, with short-term spikes less impactful than prolonged elevated prices.
- Central banks are likely to look through energy-driven inflation, with higher oil delaying rate cuts rather than prompting immediate hikes.
Read the full transcript below:
ROGER: Okay, the markets are trending lower after that speech. It offered little hope of a quick end to the war. Add to that, oil prices jumped to about 12 per cent, and government bonds are being sold off in the U.S., pushing up yields. Let’s get some perspective. Joining me now is Christine Tan, portfolio manager at SLGI Asset Management. Christine, thanks, as always, for joining us.
CHRISTINE: Good morning, Roger. Thank you for having me.
ROGER: Did you have a chance to see the speech or listen in?
CHRISTINE: I did. I had it on — basically, I had multiple computers on around the house in case I missed it.
ROGER: What part is — I mean, is there any one thing from that speech, or is it the entire thing that’s kind of rocking the markets right now and oil?
CHRISTINE: I think it’s about expectations from the market and investors, and even our expectations heading in. It is pretty unusual — not necessarily rare, especially for President Trump — but it is unusual to call for an address to the state, right? So I think the thought was that we might get a little bit more, hopefully a sense of what the off-ramp could look like, some sort of clarity on potential objectives.
I think he stayed pretty true to script. It was a very short speech, actually, and it repeated and reiterated a lot of what we’ve heard before. Perhaps the only net new, if you will, was the mention that if there isn’t some sort of agreement or ceasefire soon, there could be a possible hit on energy facilities. That was a bit new.
So I think coming into the speech yesterday, we did see markets rally again, pricing in that optimism that perhaps we’d get a bit more clarity on a potential off-ramp. But in terms of new information, there wasn’t too much. So perhaps today’s action is a little more about reversing some of that optimism, as opposed to true pessimism.
ROGER: Right now, I’ll take that as some optimism with everything the way it’s unfolding. So do you think this will be what we’ll see on the markets today? I mean, a down day, it looks like, but not as down as it could be if they really thought this thing may last a long time?
CHRISTINE: Correct. And that’s exactly the right way to characterize it, Roger. The market is still taking a little bit of comfort in that two- to three-week timeline. There is some concern that we might see a bit of escalation over the next two to three weeks. But again, the hope is that this conflict will resolve within weeks and the Strait of Hormuz will start to normalize.
The key thing we’re all watching is to make sure there are no oil facilities that are permanently disrupted, because there are two phases to this. The reopening of the Strait of Hormuz is obviously the most important phase right now, because a lot of goods move through it — fertilizer, helium, in addition to oil.
The second, longer-term impact is what kind of permanent or longer-term impairment to production we might see if facilities are actually hit. That’s what the market is trying to assess, and what we’re trying to assess as well. Details are quite scarce, rightly so, given that it is a live conflict.
ROGER: And with oil — it’s up nearly 12 per cent, I think close to 13 per cent today. What are your thoughts on that? Is that just a reaction and it’ll calm down, or is this the start of something that could continue to climb, maybe toward 150 as some have been talking about?
CHRISTINE: It’s hard to tell. I mean, when it comes to oil, I’ve been in the industry since the 90s — it’s very hard to predict direction. A big part of what we’re seeing, especially at the front end of the curve, is the pricing in of uncertainty.
If you look at the back end, oil prices have been remarkably stable. What we are seeing, especially in Asia, is a heightening in concerns around supply. There are two components to this. In North America, we are facing higher prices, and that’s going to impact consumer balance sheets and disposable income.
But in parts of Asia, it’s not just about the price — there is, in some cases, a lack of supply. You’re seeing some countries asking people to work from home, avoid driving and limit travel if they can. So that’s starting to show up more.
I think that’s why oil prices are reacting more today on the lack of new information than they might have two weeks ago. But ultimately, we are optimistic and hopeful that there will be a resolution to this conflict in the Middle East.
ROGER: And I mean, I’m just looking — one story I saw earlier, European diesel futures hit $200.
CHRISTINE: Yes. And that’s it — Europe’s natural gas prices are also impacted. Europe is definitely caught up in this, in addition to Asia. They are energy constrained and large net importers, and now their two main supplies — Russia and the Middle East — are compromised in different ways.
So they’re trying to figure out how to address this. There’s a group gathering in the U.K. to discuss some kind of solution to the Strait of Hormuz. We’re watching that closely to see what the potential actions could be.
But we doubt there will be outright military involvement. It will likely be more about negotiation — trying to create some kind of third-party off-ramp for the two sides in the conflict.
ROGER: And for the Bank of Canada and the Fed — what are they doing with all this? Because we’re now hearing talk about inflation, maybe stagflation, maybe recession — all kinds of words being used.
CHRISTINE: Roger, this is the worst nightmare for any central bank — stagnant to declining growth while inflation is picking up.
I think it’s important to highlight that this kind of spike in oil prices is different from what we saw in the 1970s. Typically, when inflation is high, central banks raise rates to reduce demand and slow the economy.
In this case, the spike in oil is due to a disruption in supply. And we’re already starting to see the impact on consumers’ balance sheets and wallets. So in a way, higher oil prices will destroy some of that demand on their own.
Both the Fed and the Bank of Canada recognize that, so they don’t feel higher rates are necessarily the solution. That demand destruction will happen naturally.
Specific to Canada, we also have more softness and spare capacity in the economy — meaning we don’t need to hike rates to slow demand. The Fed has a more complex picture, but we think higher energy prices and inflation fears are not yet feeding into long-term inflation expectations.
What this likely does is delay rate cuts. Earlier this year, bond markets were pricing in two cuts by the end of 2026. Now, it’s more likely mid- to late-2027. There is also some pricing of hikes, but we don’t think that’s the base case.
ROGER: Okay, we have to wrap it up there. But Christine, thank you, as always, for joining us.
CHRISTINE: Thanks, Roger.
ROGER: Christine Tan, portfolio manager at SLGI Asset Management.
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This BNN Bloomberg summary and transcript of the April 2, 2026 interview with Christine Tan are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
