This week we examine the implications of the war in Iran and the rising uncertainty now weighing on financial markets. Since our previous episode, titled “Inflation Intensifies Amid Credit Cracks,” the inflation outlook has deteriorated sharply as the conflict has pushed energy prices higher. In the near term, stronger inflation now appears almost unavoidable, arriving at a moment when the economic backdrop was already fragile. We also look to history for guidance on the risks building in private credit. In particular, we revisit the collapse of Executive Life Insurance in the late nineteen eighties and early nineteen nineties, when heavy exposure to high yield debt ultimately proved fatal. The episode offers a useful lens through which to consider how stress in private credit might unfold and how losses could spread into other parts of the financial system. Finally, we reflect on the unusually uncertain environment facing investors. Will the conflict prove brief or prolonged? No one yet knows. What is clear is that periods of geopolitical uncertainty tend to unsettle markets. For now, that anxiety is showing up in prices, with all three major equity indices in the United States negative for the year.