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Oil
Oil remains the key macro driver. Brent crude slipped 0.7% to about $107.23 a barrel, while a separate Reuters energy report showed Brent at $107.97 and WTI at $94.08 as trading continued. Those levels are slightly below the latest highs, but they are still extremely elevated and continue to keep inflation pressure front and center for traders, central banks, and equity markets. Brent is still up more than 48% since the war began, and WTI is about 40%, even though both benchmarks are set for weekly declines.
Equities
Equities are reflecting relief, not conviction. Wall Street futures were up about 0.6%, and EURO STOXX 50 futures rose 0.7%, while Asia remained mixed: MSCI Asia-Pacific ex-Japan was down 0.7%, Japan’s Nikkei slipped 0.1%, and both China’s CSI 300 and Hong Kong’s Hang Seng gained 0.7%. That pattern suggests investors are still rotating selectively rather than embracing a broad-based risk-on move.
Bond markets
Bond markets are still flashing inflation concerns. Two-year U.S. Treasury yield held around 3.9817% after jumping 10 basis points overnight, as traders priced a higher risk that the Fed may need to stay tighter for longer. Euro edging up to $1.1544, USD/JPY near 159.61, and gold rebounding 2% to roughly $4,468 an ounce. In other words, the market tone is still classic late-stage geopolitical macro: elevated yields, fragile equities, a softer but still firm dollar backdrop, and a partial bounce in gold.
The macro narrative
The macro narrative underneath today’s price action is increasingly a stagflation-style one. A Reuters poll published March 26 found that most economists now expect the Federal Reserve to keep rates unchanged until at least September, even though markets have been forced to reprice the path sharply because of war-driven oil inflation. The same Reuters poll said economists have pushed up their PCE inflation forecasts, with the PCE index now expected at 3.3% in Q2, 3.1% in Q3, and 2.9% in Q4. That keeps the Fed story uncomfortable for risk assets: growth is losing momentum, but inflation is not easing fast enough.
The UK data today reinforced that same pressure. Reuters reported that UK retail sales fell 0.4% month-on-month in February after a strong January, while annual sales growth slowed to 2.5% from 4.8%. A separate Reuters report showed GfK UK consumer confidence falling to -21 in March from -19 in February, its lowest reading in nearly a year, as households worried about the economic and inflation fallout from the Iran war. These are early warning signs that the energy shock is already beginning to filter into real consumer behavior.
Economic calendar
For today’s economic calendar, the main scheduled U.S. release is the final March University of Michigan consumer sentiment report at 10:00 a.m. ET. The Michigan survey site showed the preliminary March sentiment index at 55.5, down from 56.6 in February, and confirmed that the final March data are due today. Meanwhile, the BEA release schedule shows that the February Personal Income and Outlays report, including PCE, is not due today and has been shifted to April 9. That likely leaves today’s session more exposed to headlines from oil, Iran, Hormuz, and rates than to a heavy U.S. data calendar.
The bottom line
The bottom line for traders is straightforward. Markets are trying to bounce, but they have not escaped the energy-inflation regime. Oil is off the highs but still too high for comfort, yields remain elevated, central banks remain cautious, and any fresh geopolitical headline can still trigger a fast repricing across stocks, FX, bonds, and commodities. For now, today’s move looks more like a pause in stress than a durable reset in sentiment.
Q&A
What is driving markets today?
The main driver is still oil and geopolitics. Markets are responding to a temporary easing in escalation risk, but elevated crude prices and inflation concerns continue to dominate cross-asset trading.
Why are equities rebounding if the backdrop is still weak?
The rebound appears to be more of a relief move than a true shift in trend. Futures rose after Trump extended the deadline for attacks on Iran's energy infrastructure, but broader market positioning still shows caution rather than strong conviction.
Why is oil still the most important asset to watch?
Because crude remains the clearest transmission channel from war risk to inflation, central bank expectations, and equity valuations. Even after Friday’s pullback, Brent and WTI are still at levels that keep macro pressure elevated.
What does today’s market say about the Fed?
The market is increasingly worried that the Fed may need to stay restrictive for longer. Reuters’ economist poll now points to rates staying on hold until at least September, with inflation forecasts revised higher because of the energy shock.
What data matter most today?
The main scheduled U.S. release is the final University of Michigan consumer sentiment in March at 10:00 a.m. ET. PCE is not on today’s calendar; the BEA schedule shows the February report is due on April 9.
What should traders watch into the close?
Oil, Treasury yields, the dollar-yen pair near 160, and any new Iran- or Hormuz-related headline remain the most important real-time market drivers.
Sources: Reuters; University of Michigan Surveys of Consumers; U.S. Bureau of Economic Analysis.
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