Geopolitical Risk Premium Drives Structural Portfolio Rotation to Defensives
Markets are pricing in sustained 2% daily volatility as the new normal, triggering systematic flows from growth/tech into energy, defense, and Treasury instruments. The Iran conflict resolution hopes provided temporary relief, but the underlying shift toward defensive positioning suggests investors expect prolonged uncertainty rather than a brief shock.
This rotation signals a fundamental reassessment of risk-adjusted returns, potentially ending the tech-led growth cycle that has dominated markets.
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