Iran-Israel conflict will slow global economy and limit policy flexibility, says Allianz' El-Erian

Economic Outlook - The analysis suggests an acceleration of the ongoing slowdown in the global economy [2] - Policy flexibility, including that of the Federal Reserve, will be further limited [2] - Companies are reminded of the uncertainty in supply chains [2] US Treasury and Dollar - The role of US Treasuries in the global system is being eroded [2] - The world is overweight US Treasuries and the dollar, leading to reduced appetite for further accumulation [4] - There is no readily available substitute for the dollar, making the reduction in dependence a slow and gradual process [5][8] US Exceptionalism and Policy - The analysis indicates a loss of US exceptionalism and policy unpredictability [7] - Foreign investors are distinguishing between the sovereign side and the high-quality corporate side, showing less concern for the latter [8]