Markets ended the week lower as the fighting in the Middle East continued unabated. Early in the week president Trump announced a postponement on strikes of Iranian energy infrastructure after what he described as productive talks toward ending hostilities. These comments provided a brief reprieve to climbing oil prices as Brent dropped over 14% before trimming losses as Iran denied the discussions. News of negotiations were met with skepticism by traders that the U.S. and Iran will reach a ceasefire any time soon. The S&P ended the week sliding ~1.7% in back-to-back trading sessions marking the longest weekly slide since 2022. The S&P is, however, holding up slightly better as the Dow and NASDAQ closed the week in correction territory (-10% off their recent highs).
The Organization for Economic Cooperation and Development (OECD) released their March 2026 economic outlook that notably raised its forecast for U.S. inflation this year estimating headline prices to rise at a 4.2% rate, well above the Fed expectations for 2.7%. The sharp increase is due to a growing concern that a protracted war in Iran will keep oil prices elevated. Global benchmark crude prices topped $110/barrel to close the week, and are at the highest levels since July 2022 when Russia’s invasion of Ukraine disrupted energy markets.
Wednesday the Bureau of Labor Statistics reported that import prices rose 1.3% in February, the largest month increase in nearly four years. The recent confluence of rising import costs and surging energy prices are pushing markets to consider the probability of a rate hike rather than a cut in 2026. Futures markets increased the likelihood of a rate increase to 52% as of Friday morning. The 10-year treasury yield jumped as high as 4.46%, its highest level since July 2025.
