Futures Jump, Oil Slides On Fresh Hormuz Hopes

Stock futures are higher AS energy prices dip modestly even as the war in the Middle East enters a third week, with Trump’s endgame unclear amid requests for international help to reopen the SoH. As of 8:00am ET, S&P futures are up 0.8% and and Nasdaq futures gain 1.0% with all Mag 7 names higher in premarket trading led by Meta which is reportedly planning layoffs that could affect 20% or more of the company. The bounce in futs and the slide in oil coincided with comments from the Iranian Foreign Minister that the US has already learned a good lesson. However, he did also note that the nation is not requesting a ceasefire and has not messaged the US. Cyclicals outperform Defensives in what appears to be a relief rally. As JPM writes this morning, "it is unclear if futures are following the recent trend of a higher Monday into a sell off for the balance of the week, or if the market is pricing a pivot despite the likelihood that oil production curtailments will approximately double this week." Bond yields are lower by 1-2bp as the curve bull steepens, and USD is lower. Commodities are weaker ex-Energy. Initially oil jumped at the start of futures trading on Sunday night following a second attack in three days on Fujairah, a vital port in the UAE that’s just outside the Strait of Hormuz, but has since turned red. And while shipping through the Strait has been all but halted since the war started, several Iranian tankers as well as a vessel controlled by have made the journey. Today’s macro data focus is on Industrial Production, home prices, and regional activity indicators. The Fed meeting (plus other major CBs) and PPI are the other major releases this week.

In premarket trading, Mag 7 names are all higher: Meta rises 2% after Reuters reported that the social media giant is planning layoffs that could affect 20% or more of the company (Nvidia +1%, Tesla +0.9%, Apple +0.3%, Microsoft +0.6%, Amazon +0.5%, Alphabet +0.1%).

Micron Technology (MU) climbs 4% — lifting other memory and storage companies — as analyst optimism grows ahead of the chipmaker’s results later this week.
Nebius shares jumped 15% in premarket trading after Meta said it will pay as much as $27 billion over the next five years for access to artificial intelligence infrastructure from the cloud provider
National Storage Affiliates Trust (NSA) rises 25% after agreeing to be purchased by Public Storage Operating Co.
Sable Offshore Group (SOC) rises 6% after the energy company said it restarted oil transportation at its California pipeline after the Trump administration invoked the Defense Production Act.

While attacks on oil facilities kept crude trading well above $100 a barrel, prices slipped about $4 off levels hit earlier in the day. Following the transit of two vessels on the weekend, India is attempting to get six others to cross, while several other nations are trying back channels to Iran to ensure safe passage for their tankers.

“The market is trying to stabilize, but it is not one that has turned optimistic,” said Charu Chanana, chief investment strategist at Saxo Markets. “Equities may welcome any sign that Hormuz could be reopened, but with further strikes still being threatened and diplomacy still patchy, conviction is low and positioning is likely to stay very twitchy.”

On tech, after the Mag-7 entered a technical correction on Friday, investors will turn attention to Nvidia’s annual AI conference this week. CEO Jensen Huang is giving a keynote speech at 2 p.m. ET today. In other AI news, Nvidia partner Hon Hai reported 4Q net income below consensus. Helping the tech space, the US Commerce Department withdrew its planned rule on AI chip exports, Reuters reported.

Turning to the broader market, several strategists are calling the bottom for equities: Morgan Stanley’s Michael Wilson says the market’s correction phase is nearing its end, and JPMorgan’s Mislav Matejka recommends buying the dip, while on the other side Goldman warns that in a severe oil shock the S&P could fall to 5,400. Meanwhile, Deutsche Bank strategists write that inflows to equity funds (+$13.2b) picked up last week, with the biggest inflows into Japan (+$6.3b) since May 2013 and record Korea inflows (+$8.9b) while China saw outflows (-$7.8b).

As we noted last night, Goldman predicts that the AI investment boom should offset the drag from modestly weaker economic activity for corporate earnings in the US, reiterating a forecast for 12% EPS growth for the S&P 500 in 2026. Global equities are at risk of a correction, though probably not a bear market, according to other strategists at the bank. On the other hand if the oil crunch extends, the S&P could drop as low as 5,400 in a worst case scenario according to Goldman.

Wild swings in oil have led to an unusual range of moves across rates, commodities and equities, fueling significant trading activity in exotic options by hedge funds. Financial stocks are off to their worst start to a year since the Covid pandemic, with investors expecting more pain ahead as worries over everything from private credit to the Iran war roil the troubled sector.

Attention will also focus this week on a slew of central bank meetings, including at the Federal Reserve, European Central Bank, Bank of Japan and the Bank of England. Those will be crucial to gauge policymakers’ thinking on how the oil shock will impact economy and the prospect for interest rates.

While oil near $100 a barrel fanning inflation fears, it’s also likely to dampen economic growth, casting uncertainty on how policymakers will respond. “Every day that goes by with the Hormuz Strait closed is another bad news for the global economy,” said Francois Rimeu, senior strategist at Credit Mutuel Asset Management. “If the crisis continues there will be at some point some kind of trigger that will make investors realize the scale of the supply shock that’s building up.”

European stocks bounced off the day’s lows as Brent crude futures have pulled back from earlier highs. The moves have coincided with comments from the Iranian Foreign Minister that the US has already learned a good lesson. However, he did also note that the nation is not requesting a ceasefire and has not messaged the US. The Stoxx 600 is down a fourth session, falling 0.2%. Energy stocks rally after fresh attacks on oil infrastructure in the Middle East caused Brent prices to surge, while automakers lag. Here are some of the biggest movers on Monday:

GN Store Nord shares jump as much as 42%, the most on record, after Amplifon agreed to buy its hearing-aid business. Amplifon shares drop as much as 13%.
Commerzbank shares climb as much as 5.3% after UniCredit made a €35 billion for the lender that will allow it to increase its shareholding beyond 30%, easing the path for a potential future acquisition.
MTN shares surge as much as 7.4%, the most in two months as Africa’s largest wireless carrier returned to profit, declared a dividend that beat estimates and said it plans to buy back shares.
Tecan shares drop as much as 6.3% to the lowest level in more than a decade after the Swiss maker of laboratory equipment provided guidance for 2026 which analysts said will spur downgrades to estimates.
Idorsia shares fall as much as 18% to a six-month low after the Swiss pharma company said Srishti Gupta will step down as chief executive officer and from the board of directors by mutual agreement.
Standard Life shares drop as much as 3.6% after 2025 earnings with analysts noting that, while results were broadly as expected, IFRS numbers were below forecasts.

In FX, the Bloomberg Dollar Spot index falls 0.4%, with the greenback down versus all majors. USD/JPY has continued to back away from 160 following comments from the Japanese Finance Minister.

In rates, 10-year yields slipped two basis points, after rising for five straight sessions with globaL bond yields are generally softer heading into a busy week for G-10 central banks as traders weigh how policymakers will weigh the inflation and growth implications from rising energy prices. The US Treasury market has erased all its gains for the year amid concerns about both inflation and growth risks. A batch of rate decisions are due this week, including the Fed on Wednesday. It’s expected to hold rates steady, though not without dissent. Bloomberg Economics expects the central bank to signal an extended pause ahead and add two-sided language around the rate path — flagging upside risks to inflation as well as downside risks to employment.

As Wall Street dialed back its bets on rate cuts for this year, bonds from the US to Japan and Australia have dropped. A gauge of global debt has also ceded its year-to-date gains. Gold traded below $5,000 as high oil prices threaten Fed rate cuts. Still, analysts at Goldman Sachs Group Inc. expect Treasuries and most other government bonds to edge higher by year-end, seeing growth risks outweighing the inflation pulse.

In commodities, spot gold and silver are down 0.7% and 3.3% respectively. Bitcoin continues to climb, up 2.2%. WTI drops 2.5% to $96.25 after rising as high as $101 early in the session.

Looking at today's calednar, Empire manufacturing for March is due at 8:30 a.m. New York, followed by February readings for industrial production and capacity utilization at 9:15 a.m. The Fed’s external communications blackout continues.

Market Snapshot

S&P 500 mini +0.7%
Nasdaq 100 mini +0.9%,
Russell 2000 mini +0.6%
Stoxx Europe 600 -0.2%,
DAX -0.2%,
CAC 40 -0.4%
10-year Treasury yield -2 basis points at 4.26%
VIX -1.2 points at 26.03
Bloomberg Dollar Index -0.3% at 1213.82,
euro +0.3% at $1.1449
WTI crude +0.6% at $99.34/barrel

Top Overnight News

Donald Trump demanded other countries, including China, help secure passage for ships in the Strait of Hormuz. He told the FT his planned summit with Xi Jinping may be delayed if Beijing doesn’t assist. Iran’s foreign minister denied it’s seeking talks or a ceasefire after Trump told NBC he’s willing to make a deal but wants better terms. BBG
Top U.S. and Chinese economic officials were due to conclude talks in Paris on Monday, with potential areas of agreement in agriculture, critical minerals and managed trade that could be taken up by U.S. President Donald ‌Trump and Chinese President Xi Jinping in Beijing. In the talks, the Chinese side showed openness to potential additional purchases of U.S. agricultural goods. RTRS
Japan’s defense minister said the nation has no current plans to send warships to the Strait of Hormuz. Separately, the finance minister said officials are prepared to respond boldly to currency market movements. BBG
Volodymyr Zelenskiy said a drone deal with the US is still possible despite Trump’s public rejection. BBG
American oil executives delivered a bleak message to Trump officials in recent days: The energy crisis the Iran war has unleashed is likely to get worse. Exxon CEO Darren Woods said that oil prices could rise past current elevated levels if speculators unexpectedly bid up prices and that markets could see a supply crunch of refined products. WSJ
China's economy began the year on a firmer footing as factory output quickened while retail sales and investment rebounded in January-February, offering early relief for policymakers as the U.S.-Israeli war with Iran injects fresh uncertainty for growth. China saw retail sales (+2.8% vs. the Street +2.5%) and industrial production (+6.3% vs. the Street +5.3%). RTRS
Socialist Emmanuel Gregoire led the first round of Sunday’s Paris mayoral election. Runoffs for the municipal polls will be held March 22. BBG
Wealthy individuals have sought to pull more than $10bn from some of the largest private credit funds in the 1st quarter, prompting investment managers to limit withdrawals and threatening to stall one of Wall Street’s most important sources of growth. FT
Meta will pay up to $27 billion over the next five years for access to AI infrastructure from neocloud firm Nebius, as it seeks to compete with the industry’s top frontier models. Meta shares rose premarket after Reuters reported it’s planning layoffs that may affect 20% or more of its workforce. The cuts are aimed at offsetting costly investments in AI. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks mostly declined amid cautiousness at the start of a busy week of central bank activity and following the continued conflict after the US struck military targets in Iran's Kharg Island oil export hub, but left oil infrastructure intact. ASX 200 was led lower by mining, materials, resources and tech, while the RBA kicked off its two-day policy meeting, where the central bank is widely expected to hike rates for the second consecutive meeting amid inflationary pressures. Nikkei 225 retreated amid losses in utilities and electric names due to the ongoing energy-related uncertainty, despite Japan beginning its emergency oil release, while the Japanese data calendar is quiet to start the week, but begins to pick up on Tuesday, and the BoJ are also set to conduct a policy meeting later in the week. Hang Seng and Shanghai Comp were mixed as participants digested stronger-than-expected activity data for China, and with US-China trade talks in Paris on Sunday said to be constructive and will resume today. However, there were also comments from US President Trump, who called for China to help open the Strait of Hormuz and suggested a potential delay to the Trump-Xi summit scheduled later this month.

Top Asian News

China's stats bureau's spokesperson expects consumption to rise steadily this year as policy measures gain traction, but noted that more support is needed.
Japanese Finance Minister Katayama said prepared to take decisive steps on FX.

European bourses are mixed to start the week as the Middle East conflict remains the dominant macro theme. The FTSE 100 outperforms as oil majors gain with crude above USD 100/bbl, while the FTSE MIB lags after Amplifon declines on news it will acquire GN Store Nord’s hearing unit for DKK 17bln. European Sectors are also mixed. Energy leads as Brent holds above USD 100/bbl, with Real Estate also firmer as Segro gains following a broker upgrade and UK Rightmove house prices rise M/M. Basic Resources initially underperformed as spot gold dips below USD 5,000/oz, while Banks remain pressured.

Top European News

Swiss Sight Deposits (w/e 13th Mar), CHF: Domestic 433.5bln (prev. 428.8bln), Total 454.4bln (prev. 454.07bln).
UK Rightmove House Prices YY (Mar) -0.2% (Prev. 0.0%).
UK Rightmove House Prices MM (Mar) 0.8% (Prev. 0.0%).

FX

DXY is marginally softer as the index takes a breather after reclaiming the 100.00 level, while traders brace for a heavy central bank week and monitor Middle East tensions. US President Trump is reportedly seeking a coalition to reopen the Strait of Hormuz and weighing the seizure of Iran’s Kharg Island, while also warning NATO and calling on China to help secure the waterway. DXY trades in a narrow 100.18–100.48 range after Friday’s 99.59–100.54 band. The FOMC is widely expected to leave rates unchanged at 3.50–3.75% on Wednesday, with markets not pricing a cut until Q4 2026.
EUR/USD rebounds from around a seven-month low amid the softer dollar but remains below 1.1500 (1.1414–1.1456 range) amid quiet Eurozone newsflow and geopolitical uncertainty. The pair remains within Friday’s 1.1411–1.1530 range. The ECB is expected to keep rates unchanged at 2.0% on Thursday, though higher energy prices have pushed market pricing slightly more hawkish, with a 25bp hike now fully priced by year-end.
GBP/USD edges higher alongside the weaker dollar after recently hitting a year-to-date low. UK ministers are set to announce a GBP 50mln support package for households facing the energy shock from the Iran conflict, while the UK is also exploring an EU tuition fee cut to reset post-Brexit relations. The BoE is expected to keep the Bank Rate at 3.75% on Thursday, though energy-driven inflation risks have prompted a more hawkish repricing.
USD/JPY is choppy in the absence of Japanese data, with comments from Japanese Finance Minister Katayama stating authorities are ready to take decisive FX steps if needed. The pair trades within 159.17–159.75, inside Friday’s 159.01–159.76 range. The BoJ this week is expected to keep rates unchanged at 0.75%, although markets still price a possible hike by June.
Antipodeans outperform. NZD/USD leads gains despite mixed domestic data, while AUD/USD reclaims the 0.7000 level ahead of the RBA decision tomorrow, where the central bank is widely expected to deliver another rate hike.

Fixed Income

USTs are slightly firmer as Treasuries digest the weekend’s modest geopolitical escalation and higher energy prices. Futures trade in a narrow 111-12+ to 111-21+ range, but remain near recent lows at the bottom of March’s 111-11 to 114-06 band and close to the January and February troughs of 111-06+ and 111-08+ as markets await a busy central bank week.
Bunds edge higher in quiet trade, with gains of around nine ticks in narrow sub-20 tick ranges. Focus in Europe centres on energy-related meetings this week, including a press conference later today that could discuss EU-wide measures to stabilise energy markets and updates on proposals for a “coalition of the willing” to reopen the Strait of Hormuz.
Gilts outperform after gapping higher by 26 ticks and extending gains to an 88.84 peak, leaving futures up just over 30 ticks at best. The move reflects partial recovery after Gilts had previously underperformed peers during the Middle East-driven energy shock.

Commodities

Crude Futures extend gains as markets digest weekend escalation in the Iran conflict and fresh risks to regional energy infrastructure. WTI trades above USD 100/bbl within a USD 96.74–102.44/bbl range, while Brent hovers around USD 105/bbl (USD 102.04–106.50/bbl), however WTI narrowly underperforms Brent futures on news US called for oil producers to increase output to combat surging global energy prices. The US conducted strikes on military targets on Iran’s Kharg Island, from where most Iranian oil exports originate, though oil infrastructure was left intact. Prices also rise after reports the UAE’s Fujairah port was struck with loadings suspended, while Saudi Crown MBS reportedly urged Washington to maintain military pressure on Iran. Meanwhile, Trump says China should help reopen the Strait of Hormuz ahead of a planned Beijing visit.
Nat Gas is firmer alongside the broader energy complex as geopolitical risks underpin prices, with front-month Dutch TTF near EUR 52/MWh.
Spot Gold is flat in choppy trade within a USD 4,967.77–5,036.01/oz range as the metal tracks USD movements while traders monitor oil-driven inflation risks ahead of a heavy central bank week.
Base Metals are softer across the board. Copper recovers from Friday’s lows but upside is capped by cautious risk sentiment. Meanwhile, Aluminium Bahrain begins a phased shutdown of Reduction Lines 1–3 (around 19% of its 1.62mln-tonne annual capacity) in response to the effective closure of the Strait of Hormuz.
Senior US administration official acknowledges that prices will continue to rise but admits there is little the government can currently do at the moment, according to a CNN reporter.
Oil executives warned the Trump administration the energy crisis will likely worsen and that the closure of the Strait of Hormuz might push up oil prices further, according to WSJ.

Trade/Tariffs

US and Chinese officials held candid and constructive talks in Paris on Sunday and agreed to enhance stability in the trade relationship, according to sources familiar with the talks, while the sides met for six hours and will resume talks on Monday. US Treasury Secretary Bessent and USTR Greer raised the need for China to buy more Boeing aircraft, US coal, oil and gas, while US and Chinese officials discussed solutions to difficulties faced by some American firms in obtaining rare earths. Talks will continue on a technical level on Monday.
China responded to US allegations of forced labor in the Section 301 probe and has lodged a formal representation with the US over the investigation.
Indian Trade Secretary said the US-India trade deal will be signed when the US re-establishes global tariff rates. The US is working on recreating global tariff architecture.
Indian Trade Secretary said exports to West Asia have been impacted by the Middle East situation; India is considering measures to support exports to the Middle East.

Geopolitics

US President Trump said he ordered a strike that wiped out every military target on Kharg Island, which is where Iran exports nearly all of its oil from, but left the oil infrastructure intact which he would reconsider if Iran interferes with the safe passage of ships in the Strait of Hormuz.
US President Trump said he is hearing that Iran’s new Supreme Leader Khamenei may be dead, and that it is not clear if Iran has laid mines in the Strait of Hormuz, while he also stated that he is not ready to make a deal with Iran because the terms aren’t good enough yet. Furthermore, Trump said recent strikes on Kharg Island demolished most of the island and commented that they “may hit it a few more times just for fun”.
US President Trump posted that they have destroyed 100% of Iran’s military capability and that many countries will send warships to help keep the Strait of Hormuz open and safe.
US President Trump said they have had strong results in Iran and he does not believe Iran is ready to negotiate, but will be ready to negotiate at some point. Trump also said the US is talking to other countries about policing the Strait of Hormuz and cannot say which countries will help yet, while a few countries would rather not get involved. Furthermore, he called on NATO to help and thinks China should come in to help on the Strait of Hormuz.
US President Trump seeks a Hormuz coalition and is weighing seizing Iran's critical oil depot on Kharg Island — a move that would require US boots on the ground — if tankers remain bottled up in the Persian Gulf, according to US officials cited by Axios.
US President Trump warned that NATO faces a very bad future if US allies fail to assist in opening up the Strait of Hormuz, according to FT.
US lawmakers have begun talking about a supplemental funding bill for the Iran war, Punchbowl reports; package could have a USD 100bln or greater price tag, according to sources.
Israel's IDF has launched a focused ground operation in southern Lebanon, including a build-up of forces in order to capture more forward lines, N12 reported.
Israeli Home Front notifies of a missile attack from Iran targeting areas in central Israel.
Iran's Foreign Minister Araqchi says no messages have been exchanged with the US and that Tehran has not asked for a ceasefire as the "war needs to end in a way that ensures it does not happen again".
Iran's Foreign Ministry Spokesperson Baghaei says parties not involved in the war have had vessels pass through Hormuz with coordination and permission from Iran's military. The Strait of Hormuz is only closed to the enemies of Iran.
The Iranian Army Spokesperson said the support centre of the USS Ford in the Red Sea are considered as targets, Al Arabiya reported.
Iran's media operations centre warns residents in specific areas of Dubai and Doha of possible attacks in the coming hours, while it stated that US military personnel are hiding in locations in Doha and Dubai and urges residents to evacuate immediately.
Oil loading at UAE's Fujairah suspended after the port was hit, Bloomberg sources report.
UAE's Fujairah port was hit and the damage is being assessed, Bloomberg reported citing sources.
Multiple locals are said to confirm smoke rising in the vicinity of Dubai International Airport, but it is unclear what has been targeted, according to Faytuks News.
Explosions heard in Bahrain's skies as air defences intercept an Iranian attack, according to Sky News Arabia.
Missile bombardment targets US military base for logistical support at Baghdad airport, according to Al-Haddath.
The meeting of European foreign ministers will discuss the protection of sea lanes and the Strait of Hormuz, Al Jazeera sources report.
Russia's Kremlin says we are open to continuing Ukraine negotiations and that US President Trump has not lost interest, instead he recommended Ukrainian President Zelensky make a deal

US Event Calendar

DB's Jim Reid concludes the overnight wrap

After Friday's revelation that it was the first consecutive monthly Friday 13th for 11 years, today's nearly-as-impressive revelation is that this week sees the Fed, ECB, BoJ and BoE all meet in a single calendar week for the first time since December 2021. So a "super week" for central banks. All of them will have a very complex backdrop to deal with, shaped by geopolitical risk, volatile energy prices, and unsettled inflation dynamics.

Clearly the Middle East is the centre of attention for markets right now, and as we go to press this morning, the market turmoil is showing no sign of easing. Brent crude oil prices are up another +1.65% to $104.84/bbl, building on their +42% rise over the previous two weeks since the strikes began. Moreover, that’s actually beneath the overnight highs, as Brent had been as high as $106.50/bbl when markets reopened on Sunday night.

The latest gains for oil follow the news late on Friday (after the US close) that the US had conducted bombing raids on Kharg Island. That’s particularly significant because around 90% of Iran's crude exports are shipped from there. For now, Trump said in a post that he’d chosen not to destroy the oil infrastructure, but he also said he’d reconsider that if Iran interfered with ships’ passage through the Strait of Hormuz. So markets are still concerned about further escalation, and with each passing day investors have moved to price in a more protracted conflict. For instance, 6-month Brent futures are up another +0.33% this morning at $85.94/bbl.

In the meantime, there’s also been no sign of the two sides moving towards negotiations. For instance, Trump said to NBC on Saturday that “Iran wants to make a deal, and I don’t want to make it because the terms aren’t good enough yet”. However, on the Iranian side, their foreign minister Abbas Araghchi said “We don’t see any reason why we should talk with Americans”. So the rhetoric has only added to the fears about an extended conflict and a sustained period of high oil prices.

When it comes to oil prices, all eyes are still on the Strait of Hormuz, and when that will begin to reopen. Interestingly, the WSJ reported last night that the Trump administration would announce plans this week about a coalition of multiple counties that would escort ships through the Strait of Hormuz. However, the report also said it was still under discussion whether it would start before or after the hostilities actually ended. So clearly that’s one we need to get the details on.

Overnight in Asia, we’ve seen a mixed performance across the major equity indices. Most have fallen back, including the Nikkei (-0.45%), the Shanghai Comp (-0.32%), the CSI 300 (-0.25%) and the S&P/ASX 200 (-0.39%). However, South Korea’s KOSPI is up +0.72%, and in Hong Kong the Hang Seng is up +1.30%. Looking forward as well, futures on the S&P 500 are up +0.50%, signalling a pickup from Friday’s close, when the index hit its lowest since November.

Meanwhile, the Chinese activity data for February has also been stronger than expected overnight. For instance, industrial production is up +6.3% on a year-on-year basis over the first two months of the year (vs. +5.3% expected), and retail sales also beat expectations at +2.8% (vs. +2.5% expected). However, given the strikes on Iran began on February 28, we’ll have to wait for the March and April releases to get a better sense of how that’s impacting the data.

Whilst the conflict is set to dominate the week ahead, we do still have those four big central bank meetings, where all eyes will be on their reaction functions to the war’s impact and the latest oil shock. Starting with the Fed, our economists expect them to keep rates unchanged this week (see their full preview here) and think they’ll emphasise elevated geopolitical uncertainty. They only expect minor statement tweaks, including smoothed language on recent labour data (especially given January and February’s conflicting payrolls) and a nod to geopolitical risks, highlighting uncertainty and near-term upside pressure on inflation. Then at the press conference, they think Chair Powell is likely to stress that recent events mainly transmit through financial conditions—particularly oil prices. For now, however, our economists think he’ll avoid signalling any meaningful shift in the near term policy outlook.

For the Fed, an important consequence of the conflict is that higher energy prices have begun to feed into inflation assumptions. So our economists have nudged up their headline inflation estimates for this year, and they expect Fed officials to reflect a similar adjustment when they publish their updated Summary of Economic Projections. Indeed, core PCE inflation has registered back-to-back 0.4% monthly increases now, pushing the year-on-year rate to 3.1%, the highest since early 2024. For the dot plot, our economists are still expecting it to signal one rate cut this year, although it wouldn’t take much to shift the median dot for 2026. Clearly though, the outlook is going to remain heavily dependent on the oil price. For example, our economists have found that a sustained oil price around $100/bbl would still see the projected tax benefits to consumers from the One Big Beautiful Bill Act outweigh the drag from higher effective energy costs (see here). However, a move toward $150/bbl would pose a more material risk to consumer spending and the broader outlook.

Beyond the Fed, this week’s incoming data is unlikely to materially alter the tone of the meeting. Our economists expect February’s industrial production today to rise by 0.3%, slower than January's 0.7%, largely due to softer utility output, though oil and gas extraction will be worth monitoring. Otherwise, the regional manufacturing surveys from New York and Philadelphia could reflect some drag from geopolitical uncertainty, with particular attention on capital spending components. And given the recent labour market volatility, Thursday’s initial jobless claims will take on added importance as they fall within the March employment survey window.

Away from the US, this Thursday will bring the ECB, BoE and BoJ meetings, with our economists expecting all three to leave rates on hold, with the emphasis firmly on guidance rather than action. At the ECB, our economists expect the Governing Council to acknowledge heightened uncertainty and near-term upside risks to inflation, while stopping short of explicitly flagging medium term risks. They also expect a strong reiteration of policy flexibility and a clear message underscoring the ECB’s unwavering commitment to price stability, with officials keen to signal that they stand ready to act to avoid a repeat of the 2022–23 inflation episode. See their full preview here.

Then in the UK, our economist thinks the MPC will lean into a dovish wait and see stance amid a more clouded outlook following the Iran related energy shock. He expects a less divided vote than in February, with the majority favouring an unchanged Bank Rate, while two members continue to favour a cut. Although our economist still sees two rate cuts this year, recent developments have pushed back the expected timing. For more info, see the full preview here.

Over in Japan, our economist expects the BoJ to maintain its current stance, with attention focused on Governor Ueda’s press conference. While underlying fundamentals could justify an early hike, elevated oil prices and growth risks are likely to temper near term action, and sustained crude prices above $100/bbl would reduce the likelihood of an April move. His full preview is here. Meanwhile, other central banks making decisions this week include the RBA (Tuesday; our economists expect a hike), the BoC (Wednesday), the SNB and the Riksbank (Thursday). The latter three are widely expected to see no change in rates.

Finally this week, notable data includes Germany’s Zew survey for March tomorrow and UK labour market data due Thursday. In the geopolitical sphere, President Trump and Japanese PM Takaichi are meeting in Washington, with defence cooperation expected to be the primary topic (see more in our Chief Japan economist’s week ahead here). In Europe, this week’s events include an EU leaders’ summit (Thursday to Friday). And on earnings, the lineup includes Micron, FedEx and Lululemon in the US as well as Tencent and Alibaba in China. See the day-by-day calendar of events at the end as usual for more.

Recapping last week now, the market moves were clearly dominated by events in the Middle East, with oil prices jumping as the conflict showed no sign of ending. So that left Brent crude up +11.27% (+2.67% Friday) at $103.14/bbl, whilst WTI was up +8.59% (+3.11% Friday) at $98.71/bbl, even as the highs for the week actually happened early Monday morning in Asia. Investors were particularly concerned by an extended closure of the Strait of Hormuz, and there were notable rises for oil futures further out the curve as well, as investors increasingly priced out a swift end to the disruption. So the 6-month future was up +12.31% (+1.47% Friday) to $85.66/bbl, marking its biggest weekly jump since 2022. However, there was a bit of pullback in natural gas prices, with front-end European futures down -2.82% last week (+0.57% Friday) to €50.75/MWh.

Although the most direct moves were in the oil price, the effects cascaded across other asset classes as investors priced in a stagflationary shock. For instance, there was a clear reaction in central bank pricing, as speculation mounted about a hawkish response. So by the end of the week, markets were pricing 47bps of ECB rate hikes by the December meeting, with a rate cut fully priced in by the July meeting.

Meanwhile for the Fed, the amount of cuts priced by December’s meeting fell from 44bps to just 24bps.
That repricing had a clear effect on sovereign bonds, which suffered steep losses. In fact, the 10yr bund yield was up +12.2bps (+2.3bps Friday) to 2.98%, marking its highest level since July 2011 during the Euro crisis. Moreover, the 2yr German yield rose +13.1bps (+2.4bps Friday) to an 18-month high of 2.43%. It was a similar story for the US as well, where the 10yr Treasury yield rose +13.8bps (+1.5bps Friday) to 4.28%, its highest level since January.

All this proved a tough backdrop for risk assets, with equities losing ground around the world. So the S&P 500 fell -1.60% (-0.61% Friday) to its lowest since November, whilst Europe’s STOXX 600 fell -0.50% (-0.47% Friday), and Japan’s Nikkei was down -3.24% (-1.16% Friday). There was also a decent move wider for credit spreads, with US IG spreads up +9bps last week, marking their biggest weekly jump since the Liberation Day tariffs were announced last April. Meanwhile US HY spreads were up +15bps, Euro IG up +7bps, and Euro HY up +22bps.

Tyler Durden Mon, 03/16/2026 - 08:38