HFI Warns Oil Shock Could Trigger 48% Stock Slump as 10-Year Yield Holds Near 4.5%
Updated
Updated · Business Insider · Jun 4
HFI Warns Oil Shock Could Trigger 48% Stock Slump as 10-Year Yield Holds Near 4.5%
3 articles · Updated · Business Insider · Jun 4
Summary
HFI Research said US stocks are dangerously exposed to a severe decline, arguing equities remain near record highs even after what it called the biggest crude supply disruption in history.
Brent crude slipped 2% to about $95 a barrel on hopes for a US-Iran peace deal, but HFI said that optimism is misplaced because lost supply could take months to restore.
ADNOC estimates at least four months to recover roughly 80% of lost oil output, while the US Strategic Petroleum Reserve has fallen to 357 million barrels, a two-year low.
HFI said bonds may not protect investors either: the 10-year Treasury yield remains near 4.5% and April CPI rose 3.8%, reinforcing fears that oil-driven inflation could keep rates elevated.
The firm compared the setup to 1973, when the S&P 500 fell 48% peak-to-trough, though it expects a milder hit now and favors cash, high-quality stocks and short-duration assets.
With the largest oil disruption in history, why are stock markets still hovering near all-time highs?
After decades of investors 'buying the dip,' why is this massive oil shock supposedly different?
2026 Oil Crisis: Economic Impact, Market Turmoil, and Investor Responses to the Largest Supply Shock Since 1973
Overview
In June 2026, the outbreak of the US-Iran war led to the closure of the Strait of Hormuz, causing a major disruption in global oil flows and triggering a worldwide oil shock. This shock put intense focus on the stability of key energy supply routes and sent financial markets into a state of uncertainty. The report highlights that if the Strait reopens after one quarter, oil prices are expected to drop and economic growth could rebound, thanks to increased oil availability. However, the broader economic impact is likely to persist, with markets and policymakers closely watching for signs of recovery.