Today
Stock futures are moving lower this morning, as rising oil prices and stronger-than-expected U.S. inflation data fueled stagflation fears across markets. Brent crude jumped above $114 per barrel following escalating attacks on energy infrastructure in the Middle East, raising concerns about sustained inflation and reduced odds of near-term rate cuts from the Fed. Global equities are also lower, with major indexes in Europe and Asia under pressure. Although some investors remain optimistic due to resilient earnings and consumer strength, market sentiment is being dominated by uncertainty around the Iran conflict and its potential to further disrupt energy markets and economic growth. Investors now are paying close attention to comments from central banks, with the ECB expected to hold rates at 9:15 am ET. This comes after the BOE, Fed, BoC, and the BOJ also remained pat on their policy updates yesterday and earlier today.
Pause. The BoC held its policy rate steady at 2.25% yesterday, signaling that they will look through the near-term inflation impact of higher oil prices from the Middle East conflict while remaining focused on weakening economic growth. Governor Tiff Macklem emphasized that inflation remains close to target and that excess supply in the economy should help contain broader price pressures, even as energy costs rise. However, the central bank adopted a more cautious tone by dropping language that rates are appropriate and stating that they are ready to act if inflation proves stubborn. With job losses, slowing growth, and trade-related headwinds weighing on the economy, officials see risks tilted toward weaker growth, suggesting policy will likely stay on hold until there is clearer evidence on how long the oil shock lasts and whether it feeds more into inflation.
And another. The Fed also held its benchmark interest rate steady at 3.5%–3.75% in an 11–1 vote yesterday, as policymakers navigate persistent inflation, mixed labour market signals, and uncertainty from the Iran war. While officials slightly upgraded their growth and inflation forecasts, they signaled a cautious path ahead, with the dot plot pointing to just one rate cut this year and another in 2027. Jerome Powell emphasized that the economic impact of the Middle East conflict remains unclear, though rising oil prices have already pushed up near-term inflation expectations. Markets reacted negatively as the Fed reinforced concerns about sticky inflation and reduced expectations for near-term easing, highlighting the difficult position the central bank is in, balancing between controlling prices and supporting growth.
And another. The Bank of England kept rates unchanged this morning, unanimously voting to hold at 3.75% but adopted a more hawkish tone, signaling it is ready to act if inflation rises further due to the Middle East conflict. Governor Andrew Bailey warned that policymakers may need to respond to inflation pressures, particularly as rising energy prices feed through to consumers. The central bank raised its near-term inflation forecast, expecting UK price growth to reach around 3.5% in March, and removed previous guidance suggesting rates would likely fall. While the BOE acknowledged that monetary policy cannot directly control energy-driven price shocks, it highlighted the risk of second-round effects that could keep inflation elevated, leading markets to shift expectations toward potential rate hikes rather than cuts.
The Middle East war has triggered a shift in currency markets, with the U.S. dollar emerging as the dominant safe-haven asset as investors react to rising oil prices and heightened geopolitical risk. The near-closure of the Strait of Hormuz has pushed the dollar higher against major currencies, outperforming traditional havens like the yen, Swiss franc, gold, and even Treasuries, while reversing earlier expectations that the currency would weaken in 2026. A stronger dollar reflects the U.S.’s relative energy independence and market resilience, but it also comes with broader consequences, including tightening global financial conditions which could weigh on trade, and create risks for emerging markets with dollar-denominated debt. If this continues, dollar strength could also pressure U.S. corporate earnings (especially for multinational and tech firms) and potentially reverse last year’s boost to global trade that came from a weaker greenback.
Trickling through. Ship traffic through the Strait of Hormuz has collapsed since the Iran war began, with just 92 vessels passing in the first 15 days of the conflict, less than the average daily volumes before the conflict arose. The lack of transit underscores the severity of the disruption to a route that normally carries about a fifth of global oil supply. Despite repeated claims from Trump that the waterway could soon reopen, U.S. efforts to restore shipping have had little impact, with most recent crossings limited and often tied to Iran-linked vessels, while allies have largely declined to lend a hand in securing the route. Conflicting messaging from U.S. officials about whether the strait is open goes against the data which shows minimal activity, and experts say a ceasefire may ultimately be required to normalize flows.
Venezuela getting some payback. Venezuela won the 2026 World Baseball Classic on Tuesday, beating the U.S. 3-2 in the final to claim its first title and cap a tournament that drew record ratings, sold-out crowds, and major attention online. The championship game came down to the final inning when Eugenio Suárez drove in the go-ahead run and Daniel Palencia closed it out by striking out Roman Anthony. The event marked a breakthrough moment for the WBC, with stars such as Aaron Judge, Shohei Ohtani, Juan Soto, Tarik Skubal, and Paul Skenes helping boost interest, while upsets by teams like Italy and Venezuela added to the drama. MLB said attendance reached a record 1.6mln and tournament-related content generated more than 2.2 bln views across social platforms through the semifinals.
Diversion: Just don’t break a nail
