The escalation of the conflict in the Middle East has been the defining recent development, triggering heightened volatility and broad-based losses across global bond and currency markets. As the shock is still unfolding, uncertainty remains high. In the near term, the balance of risks points to higher inflation and weaker growth. Importantly, the global economy is structurally less sensitive to oil shocks than in previous decades, as oil intensity has declined. Historical experience suggests that oil prices typically need to more than double on a YoY basis to materially disrupt US growth and equity markets. While this remains a risk, policy actions from US President Donald Trump's administration aimed at stabilising energy markets may help contain the fallout. Two key considerations stand out. First, the asymmetrical nature of the conflict increases the likelihood of sustained disruptions to global oil supply, as Iran-aligned forces seek to keep prices elevated using unconventional tools. Second, Trump's tolerance for sustained high oil prices appears limited. Recent actions - including proposals for naval escorts, a softer stance on Russian oil sanctions, and diplomatic signalling - indicate a clear preference for moderating energy prices, particularly amid domestic political pressure linked to cost-of-living concerns ahead of the US midterm elections. In South Africa (SA), the impact has been reflected in a broad rise in risk premia across the bond curve. Market expectations have shifted away from rate cuts, with an increased probability now assigned to potential rate hikes. Despite this, we believe the conflict has disrupted - but not derailed - the country's improving macroeconomic trajectory. The Fund's duration remains higher than the benchmark (All Bond Index [ALBI]). It is strategically managed to secure an attractive return by investing primarily in a range of local fixed-rate government and corporate bonds.