Global Macro Monitor

The global market narrative has been utterly hijacked by the seventh day of the U.S./Iran conflict. While Washington demands “unconditional surrender,” the energy markets are issuing a surrender of their own, to pure, unadulterated upward momentum. Crude oil prices surged a staggering 35% this week (and another almost $20 in Sunday night trading), have climbed approximately $40 in less than a fortnight, with WTI crude breaking above $108 per barrel. Despite this parabolic spike and the very real threat of a prolonged closure of the Strait of Hormuz, a choke point for one-fifth of global oil consumption, the S&P 500 remains down a mere 1.5% for the year. This disconnect is, frankly, staggering. Our view is that U.S. equities are currently a “screaming short,” though we’d advise keeping your hand firmly on the rip cord given the market’s irrational resilience.

As of Sunday night, March 8, 2026, the oil futures market is in a state of historic upheaval, characterized by a massive price surge and extreme backwardation. Following a week of record gains, West Texas Intermediate (WTI) crude futures opened Sunday evening at approximately $108 per barrel, an 18% jump from Friday’s close. Brent crude similarly surged to over $111 per barrel.

The table below illustrates the steep backwardation in the crude oil  market, where near-term “spot” prices are significantly higher than longer-dated contracts, indicating an urgent demand for immediate

 

The complexities of forecasting in this environment cannot be overstated. We are moving beyond normal market cycles into a period of extreme volatility, where exogenous shocks override traditional economic data. While equity markets eventually stabilized following the 2022 invasion of Ukraine, the “how high for how long” question regarding energy prices remains the $100-per-barrel elephant in the room. The stagflationary risk is palpable: higher energy costs act as a global tax on consumers and businesses, just as labor markets begin to show significant cracks.

“Significant Moves” this past

week were dominated by a “one-two punch” of soaring oil and jumping Treasury yields. Global yields spiked as the market began to price in the inflationary passthrough of energy costs, with the U.S. 10-year yield reclaiming the 4.15% level. The labor market, meanwhile, delivered a “discouraging” blow; February nonfarm payrolls saw a net loss of 92,000 jobs—the largest monthly drop since the pandemic—sending the unemployment rate up to 4.4%.

Beneath the headline levels, technical deterioration is accelerating. The S&P 500 and Russell 2000 have both dropped below their key 100-day Simple Moving Averages, shifting the near-term outlook to “moderately bearish”. While “dip buyers” appeared with daily hammers to try and stem the tide, they were ultimately overwhelmed by the geopolitical premium being baked into every asset class. Private credit is also feeling the heat, with Blackstone’s BCRED and BlackRock funds facing record redemption requests as investors scramble for liquidity.

Regional Performance

United States

• Indices Tumble: The S&P MidCap 400 was the week’s laggard, shedding 4.61%, while the Dow Jones Industrial Average fell 2.9% on a total return basis.
• Sector Divergence: Energy and Software (IGV) managed to buck the trend, with IGV up ~7.5% for the week despite being down 17% YTD.
• Labor Market Shock: The surprise loss of 92,000 jobs in February completely reversed January’s upside surprises, suggesting a “lethargic” hiring environment.
• Yield Reversal: The 10-year Treasury yield jumped 18 basis points to 4.14%, reflecting renewed inflation fears fueled by the oil spike.
• Breadth Contraction: S&P 500 market breadth sank, with the percentage of members above their 200-day SMA dropping to 59.76% from 67.27% the previous week.

International

• Global Sell-off: Ex-U.S. stock indexes sustained much deeper losses than domestic markets, with the MSCI EAFE and MSCI Emerging Markets indexes both plunging nearly 7%.
• Korea: After leading the world with a 50% gain in the first two months of the year, Korean equities were hit hard as investors reconsidered global growth prospects.
• Europe: The STOXX Europe 600 tumbled 5.55% as military strikes on Iran decimated risk appetite; Germany’s DAX and France’s CAC 40 both retreated over 6.7%.
• Japan: The Nikkei 225 declined 5.49% as the “prolonged Hormuz closure” poses a significant threat to Japan’s energy-dependent economy.
• China: Beijing set its 2026 GDP growth target at a modest 4.5%–5%, signaling comfort with slower growth as policymakers focus on technology self-sufficiency.

 

The Week Ahead

Prepare for a “volatile” forecast where geopolitical headlines will likely override standard economic cycles.

• Inflation Litmus Test: Wednesday’s CPI and Thursday’s PPI reports will offer “clarity” on whether the energy spike is already manifesting in consumer and producer prices.
• GDP and PCE: Friday brings the second estimate for GDP and PCE prices, providing a look at whether growth is decelerating as fast as the Atlanta Fed’s nowcast suggests (recently revised down to 2.1%).
• Energy Watch: All eyes remain on the Strait of Hormuz; any confirmation of Gulf oil and gas exporters stopping production would send benchmarks into uncharted territory.
• Central Bank Complications: The stagflationary shock puts the ECB and the Bank of England in a “knife edge” position regarding planned rate cuts.

Corporate Pulse: Key earnings from Oracle (Monday) and Adobe (Thursday) will test if the “AI disruption” narrative can still provide a tailwind amidst the broader macro carnage.

This commentary will necessarily be speculative. Trading this week will likely be dominated by the breakout of war with Iran. However, markets do not trade in the short-term on logic; they trade on positioning, leverage, and emotion, often in that order. That caveat matters more than usual following the reported killing of Iran’s supreme leader. If confirmed and the result is protracted war, the event introduces an immediate geopolitical risk premium into global markets just as risk appetite was already fraying.

The setup heading into the weekend was fragile. U.S. equities were internally deteriorating despite flat headline performance. The S&P 500 was down modestly on the week, the Nasdaq Composite is now negative year-to-date, and AI-related enthusiasm has shifted from euphoria to existential anxiety. Even Nvidia’s “beat and raise” quarter failed to stabilize sentiment. Meanwhile, private credit concerns broadened, hitting software-related equities and financials.

Underneath, bonds told a different story. The global bond market rallied; U.S. 10-year Treasury yields fell below 4% for the first time since November. Credit spreads widened slightly. That combination, falling sovereign yields and widening spreads, rarely signals optimism.

This year’s significant moves are striking. The S&P 500 ETF is up just 0.6% YTD, but the equal-weight S&P is up 7%. The Dow Transports are up 13% while the Nasdaq is down 2.5%. Energy (XLE +25%) and materials/staples (+15% range) are leadership; technology (XLK -4%) and financials (-6%) lag. The so-called Mag 7 are no longer magnificent—Microsoft down 19%, Amazon and Tesla down ~10%. Gold (+22% YTD) continues to outperform Bitcoin (-25%), a notable reversal in the “digital hedge” narrative. Traders and investors are ditching the digital hedge for “boomer rocks.”

Internationally, U.S. markets are lagging badly. Korea is up nearly 50% YTD, Taiwan +23%, Brazil and Mexico double digits, Canada +8%. Europe is grinding higher on earnings resilience.

Continued escalation with Iran risks oil volatility, further safe-haven flows into Treasuries and gold, and renewed stress in high-beta equity segments. That said, markets have repeatedly faded geopolitical spikes unless supply chains are materially disrupted. Watch the Straits of Hormuz and potential attacks on the U.S. power grid. Predicting the durability of any move is inherently uncertain.

Stay frosty, folks.

Regional Performance

United States

• S&P 500: –0.6% week; ~flat YTD
• Nasdaq Composite: –2.5% YTD
• Dow Transports: +13% YTD
• Russell 2000: +6% YTD
• Equal-weight S&P 500: +7% YTD vs. cap-weight +0.6%
• Energy (XLE): +25% YTD
• Financials (XLF): –6% YTD
• Semiconductors (SMH): +12% YTD; Software (IGV): –20%+
• 10-year Treasury yield <4%; curve flattening with global bond rally
• Credit spreads modestly wider
• Gold +22% YTD; Bitcoin –25% YTD

Europe

• STOXX Europe 600 modestly higher; new highs
• Italy and UK outperformed; Germany mixed
• Inflation trending below ECB target in parts of eurozone
• Growth stabilizing near trend

Asia

• South Korea: +~50% YTD; strongest global market
• Taiwan: +~25% YTD; semiconductor-driven
• Japan: equities higher; yen weakness and BoJ policy debate ongoing
• China: modest gains; policy easing and property support measures underway

Emerging Markets / LatAm

• Brazil & Mexico: double-digit YTD gains
• Hungary: rate cut; election risk rising
• Colombia: rising political volatility impacting FX and bonds

The Week Ahead: Geopolitics, Data, and a Fragile Tape

1. Geopolitics Comes First

Oil is the tell.

The market’s reaction to developments involving Iran will matter more than any single economic data point this week. If crude sustains a breakout above recent highs, that reinforces energy leadership and puts renewed pressure on consumer cyclicals.

A genuine risk to the Strait of Hormuz would not be a headline event — it would be a global growth event. That would force a material reassessment of inflation, supply chains, and policy trajectories.

2. U.S. Macro: A Dense Calendar

This week’s data flow is heavy:

• ISM Manufacturing
• ISM Services
• ADP Employment
• Nonfarm Payrolls (consensus expects moderation)
• Retail Sales

The narrative hinges on whether the economy is cooling gently — or proving more resilient than the Fed would prefer.

3. Rates & The Fed: Easing Narrative Under Pressure

Markets are still cautious about near-term cuts:

• March cut probability: ~5%
• June pricing: ~57% for 25 bps

But the latest PPI print (0.8% MoM core) complicates the easing story. Sticky producer prices don’t support an aggressive pivot. The bond market is watching closely — and signaling restraint.

4. Technical Backdrop: No Cushion

The technical picture remains delicate:

• S&P 500: hovering just above the 100-day SMA
• Nasdaq: rejected at its 100-day SMA; near-term bias moderately bearish
• VIX: elevated around ~21

This is not a market with strong downside shock absorbers.

5. Positioning Risk: Hidden Leverage

Under the surface:

• AI dispersion remains wide
• Private credit stress is building
• Crypto volatility remains elevated

Leverage pockets exist — and they’re vulnerable. If geopolitical headlines persist, defensive sectors are likely to continue gaining relative strength.

Bottom Line

The global leadership rotation away from U.S. mega-cap tech is real.

Bonds are signaling caution. Gold is confirming it.

If Iran escalation remains contained, markets may attempt another volatility fade. But if energy supply risk rises, today’s “orderly rotation” could quickly morph into broader risk reduction.

This tape is stable — but not sturdy.

The week ending February 6 was defined by rising internal stress beneath still-resilient headline equity levels, with sharp dispersion across asset classes and regions. U.S. equities experienced notable volatility, with the S&P 500 briefly touching record highs early in the week before selling pressure intensified midweek. A sharp Friday rebound, however, reversed much of the damage and caught short sellers off guard, restoring modest weekly stability .

Beneath the surface, market leadership continued to broaden away from mega-cap growth, as cyclicals and value-oriented sectors—particularly energy, industrials, materials, and staples—outperformed meaningfully. In contrast, the “Mag 7” (excluding Apple) posted significant losses, reinforcing a rotation away from concentrated AI-driven equity exposure. Credit markets also reflected rising stress, with widening spreads in lower-quality credits and notable deterioration in peripheral Europe, including Greece .

In commodities, gold strongly outperformed, finishing the week higher despite sharp early volatility, while silver lagged. This divergence underscored renewed demand for defensive, liquid hedges amid macro uncertainty. By contrast, Bitcoin underperformed sharply, ending the week down roughly 10% despite a dramatic $10,000 rebound on Friday, highlighting aggressive deleveraging across speculative risk assets.

Globally, leadership continued to shift outside the U.S., with select emerging markets such as Mexico posted outsized gains. Overall, the week reinforced a key theme: headline stability masking growing internal fragility, with positioning increasingly vulnerable to macro and policy surprises

Regional Performance Highlights

United States

• S&P 500 endured deep midweek losses before a powerful Friday rebound
• Market breadth continued to improve, favoring equal-weight and cyclicals
• Homebuilders surged, benefiting from rate expectations
• Energy, Industrials, Materials, and Staples were standout performers
• Tech and software stocks lagged sharply, reflecting AI saturation concerns
• Credit spreads widened in lower-tier credits, signaling rising risk aversion

Asia

• South Korea stocks have emerged as a global leader, driven by AI-linked earnings momentum but was subject to some profit taking
• Vietnam and Indonesia equities fell more than 4% on the week
• Japan equities rose modestly, though yen weakness remained a key overhang

Europe

• Core European equities were modestly higher
• Peripheral stress increased, with Greek spreads widening
• ECB tone leaned dovish as inflation dipped below target

Latin America

• Mexico’s Bolsa surged nearly 5%, one of the strongest global performances
• Broader regional equities supported by easing inflation trends

Commodities & Crypto

• Gold outperformed decisively, reinforcing its defensive appeal
• Silver declined despite broader metals volatility
• Bitcoin fell ~10% on the week, even after a sharp $10k Friday bounce
• Crypto weakness reflected forced deleveraging and speculative risk unwind

The Week Ahead

• Productivity and AI-driven growth expectations move center stage as key macro drivers
• U.S. markets face a rare data-heavy convergence: jobs, CPI, and retail sales
• Markets remain vulnerable to spillover from crypto deleveraging
• Expect continued sector dispersion, favoring defensives and cyclicals over speculative growth
• Central bank messaging—especially from the Fed and ECB—will be critical in shaping risk sentiment