When speculative deleveraging momentum gathered pace in the summer of 2019, the Federal Reserve restarted QE. When autumn 2022 UK gilt deleveraging sparked global bond deleveraging, the Bank of England postponed QT and intervened with aggressive gilt purchases (QE) and a temporary liquidity facility.
As the March 2023 SVB/bank crisis spurred fear and deleveraging, the Federal Reserve and Federal Home Loan Banks responded urgently with $500 billion of liquidity injections. During the August 2024 yen “carry trade” unwind (Nikkei plunged 12.4% on August 5th), the forces of de-risking/deleveraging were abruptly reversed by BOJ Governor Shinichi Uchida’s reassuring comments (BOJ won’t raise rates when markets are unstable).
And when markets were at the cusp of unraveling during “liberation day” April 2025 instability, the “TACO put” (tariff pause) unleashed a major short squeeze, unwind of hedges, liquidity surge, and blow-off excess for the ages (i.e., AI arms race, “private Credit” lending finale, crypto blowoff, and caution thrown to the wind across global asset markets).
The current backdrop is unique. The IRGC currently retains the capacity to essentially shut the Strait of Hormuz. Iranian missiles and drones could potentially destroy major Middle East oil production and refining capacity. After three weeks, it’s anything but clear when bombings and assassinations will neutralize the IRGC ability to hold the world’s markets and economy hostage.
Risks to global markets, finance, and economies are the most extreme in decades. With inflation risk pummeling global bond markets, now typical central bank QE responses would come with atypical issues and challenges. At the minimum, I would expect central bank liquidity responses to be more cautious – slower and smaller in scope than markets will demand. As for the “TACO put,” it faces the Laws of Diminishing Efficacy. The President does not control war developments.
Some 1,200 CBBs ago, I titled the March 31, 2000, commentary “A Derivative Story.”
“Imagine a quaint and tranquil town near a pristine river. Throughout history, this river has been prone to the occasional dangerous flood that would completely wipe out the unfortunate homeowners within the flood zone. Demonstrating the prudence that comes from an appreciation of history, few individuals were willing to take the high risk of gambling with Mother Nature. But after several floodless years, and perhaps persuaded by stagnant profits in the property and casualty insurance business, the local insurance company… begins offering limited flood insurance…”
In my tale of woe, ongoing drought and booming flood insurance profits enticed other insurers, some increasingly eager to write policies right along the riverbank. Riverside building boomed, right along with insurance “profits.”
It didn’t take long for others to take a piece of the action, with financial speculators posing as insurance operators. The long drought solidified the notion that insurance premiums were essentially profits. And as speculators came to dominate the marketplace, few “insurers” even bothered to hold reserves against future loss claims. A vibrant reinsurance market developed, a highly liquid marketplace that allows “insurers” to easily offload policies. Many planned that, in the unlikely event of heavy rain, they would simply purchase inexpensive reinsurance. Unprecedented construction fueled community prosperity like never before, as euphoria and manic excess enveloped insurance and reinsurance markets.
Somehow, the Bubble and associated fragility went unrecognized. The few old-timers that vividly recalled past flood devastation eventually just kept their traps shut. Only losers weren’t making it bigtime.
“I will conclude this chapter (March 2000) of a derivative story with news of an ominous climate change recognized by only the most astute and sophisticated traders in the flood insurance marketplace. As the savvy ‘in the know’ players begin to unwind positions, strange happenings overwhelm the insurance market… Most unfortunately, the flood insurance and reinsurance markets have regressed to little more than a game of musical chairs. When the music finally stops, there will be scant true capital or wherewithal available to satisfy the insurance obligations created in the marketplace. One thing for sure, after years of excessive risk taking and an endemic misallocation of resources, risks have grown exponentially. A flood that not many years before would have caused relatively moderate damage now holds undeniable potential for catastrophe.”
Over the years, I’ve on occasion updated the “little town on the river” fable. It took only one major torrential rainstorm to unleash bloody mayhem throughout the reinsurance marketplace. With very few planning to actually function in the insurance business, heavy rain triggered most players to move simultaneously to offload their insurance obligations. There were no takers. The market collapsed in illiquidity.
But rather than a sad ending of a life of hard knocks and lessons learned, the story’s fateful plot was just unfolding. Local government and community bank officials moved forcefully to bail out the collapsing insurance market. This ensured that a steady stream of new policies, an ongoing building boom, and ever rising real estate prices were soon back on track.
Importantly, a new dam was constructed upriver. This essentially removed any fear of catastrophic flooding, a Godsend for the bubbling reinsurance marketplace. Sometime later, when a protracted rainy period saw the flooding river cascade over the dam crest, another insurance market panic struck the community. Local officials moved further up the river with another dam project. When the new reservoir filled to its brim, the community was again at the cusp of major crisis. Seasoned officials were ready with a plan for yet another dam – and more for the future as necessary.
The community boomed like never before. Some were disheartened to see the beautiful old riverbank homes demolished to make room for fancy casinos - beloved local businesses replaced by luxury shops and auto dealerships, real estate agents and financial advisors. Most felt heightened insecurity, as incomes failed to keep up with surging living costs and home prices. Over time, envy festered into animosity.
I don’t recall the timing of my last “little town…” update. The Iran War compels me.
There’s been an earthquake. It’s not the “big one,” but it was enough to cause cracks in one of the upriver dams. The shaking has somewhat rattled the community, but any rise in the river level has gone unnoticed. Word of cracks has not yet leaked out, with only the most knowledgeable contemplating the integrity of the dam system.
The more prudent and savvy insurance operators are moving to de-risk flood exposure, while the usual crowd of players conditioned to add policies on every price hike are keen to again take full advantage of windfall profit opportunities.
Basically, the community is unaware of myriad risks – numbed from decades of repeating bouts of torrential rain, brief flooding, bailouts, whatever it takes dam construction, and greater prosperity.
The fact of the matter is that the dam system was constructed with subpar geotechnical engineering and a lack of rigorous study and planning. Truth be told, the reservoirs and dam projects fall along a seismic hazard zone. While they don’t occur often, there is a well-documented earthquake recurrence cycle. It’s when and not if. The fault line is vulnerable, and a major quake is long overdue.
Nevertheless, it’s business as usual for most of the community. The quake is not a serious issue. Ramifications are easily dismissed. After all, the epicenter was some distance away.
Ominously, there’s that barely noticeable crack in the structure of the upriver dam. Might it presage uncontrolled water leakage, internal erosion, and catastrophic failure? What would dam collapse mean for the entire reservoir and dam system? And how about the likelihood reverberations from the distance quake triggered fragility along the local fault line? The multi-decade development from little town to booming metropolis all along the river has been nothing short of phenomenal.
March 19 - Bloomberg (Natalia Kniazhevich): “Wall Street equities traders are bracing for an unusually large tally of options expiring on Friday, which risks injecting even more volatility into a market that’s seen weeks of turbulence amid the raging Mideast conflict. Roughly $5.7 trillion in notional options tied to individual US stocks, indexes and exchange-traded funds are set to expire on Friday in the quarterly event that traders have dubbed the ‘triple-witching’ — the largest March expiry in Citigroup Inc. data going back to 1996. That figure includes $4.1 trillion in index contracts, $772 billion in exchange-traded funds and $875 billion in single-stock options.”
It was a close call, but the largest ever Q1 options/derivatives expiration went off without an accident. That said, it was anything but pretty. Friday saw a troubling market dynamic in full force. No place to hide. No safe havens. Key “insurance” (Credit default swaps) markets lurching toward dislocation. Global bonds under further heavy selling pressure. Treasuries, MBS, agencies, corporates, and muni bonds all hammered. Stocks clobbered. Precious metals battered. Spreads blowing out. CDS prices spiking higher. Emerging markets bludgeoned. Currency instability taking hold.
In short, de-risking/deleveraging intensified. “Risk parity,” “basis trades,” “carry trades”, and myriad levered strategies experienced mounting losses. In short, the leveraged speculating community is on their heels and losing balance.
The popular levered European bond trade is blowing up. Ten-year UK Gilt yields surged 15 bps Friday, trading above 5.0% for the first time since 2008. Gilt yields have spiked 76 bps since the start of the war. Italian yields jumped 19 bps Friday (up 69bps in three weeks) to 3.96%, near the high back to December 2023. Friday trading saw Greek yields rise 17 bps to 3.93% (up 68 bps in three weeks), the high back to November 2023.
Bond losses were certainly not limited to Europe. Australian 10-year yields rose 13 bps Friday to a 15-year high 5.02%, with New Zealand yields up 14 bps to 4.72%, near a more than two-year high.
Reflective of intensifying stress on popular (crowded) levered “carry trades”, EM bonds (local currency and $) were under pressure. Friday dollar bond yield gains included Argentina’s 25 bps (10.53%), Ukraine’s 18 bps (15.27%), Turkey’s 16 bps (7.53%), Mexico’s 16 bps (6.10%), Peru’s 15 bps (5.50%), Brazil’s 15 bps (6.35%), and Chile’s 14 bps (5.07%). Friday’s local currency bond yield jumps included Brazil’s 20 bps (14.18%), Cyprus's 19 bps (3.61%), Hungary’s 15 bps (7.34%), Chile’s 13 bps (5.77%), and South Africa’s 12 bps (9.28%).
Friday EM currency losses included Chile (2.1%), Brazil (1.8%), South Africa (1.6%) and India (1.1%). Pressured by mounting bank and financial stress, India’s rupee is down 4.1% y-t-d to a record low versus the dollar.
Quarterly CDS contract roll (to a later maturity) was somewhat of a factor, yet Friday’s 52 bps spike in EM CDS (to high since April) was extraordinary. US high yield CDS jumped 17 bps Friday to 375 bps, the high back to May. Investment-grade CDS jumped eight to 66 bps (high since April). Morgan Stanley, Goldman Sachs, Bank of America, Wells Fargo, and JPMorgan CDS all jumped to April/May highs. European (subordinated) Bank CDS spiked 16 bps Friday (3-wk gain 32bps) to 133 bps (high since April).
The MOVE (bond market volatility) Index spiked an extraordinary 24 Friday to 109 – the high since April, almost double the largest daily “liberation day” move. The MOVE index was at 64 bps prior to the war.
MBS yields surged 20 bps in Friday trading to 5.47%, with a three-week spike of 66 bps. It was the largest daily yield spike since April 7th (21bps). Friday action saw 10-year Treasury yields jump 13 bps to an eight-month high of 4.38% (up 44bps in 3 weeks). Friday’s 11 bps jump boosted the week’s two-year yield spike to 18 bps - to 3.90% (high since July), with a three-week surge of 53 bps. “Muni Market Rout Deepens as Iran War Stocks Inflation Concerns.”
Friday saw an alarming rout throughout global bonds and U.S. fixed income. It is not a sustainable dynamic for such highly levered markets.
Friday evening from Bloomberg (Jeff Mason and Courtney Subramanian): “President Donald Trump said he was considering ‘winding down’ US military efforts against Iran, saying that the US was close to achieving its objectives as the conflict, which has roiled financial markets and the region, nears a fourth week. ‘We are getting very close to meeting our objectives as we consider winding down our great Military efforts in the Middle East,’ Trump said in a social-media post... He cast those objectives as ‘Completely degrading’ Iran’s missile capabilities, ‘destroying’ the country’s defense industrial base, eliminating their navy and air force, never allowing Tehran to get close to a ‘Nuclear Capability’ and protecting Middle Eastern allies.”
On the one hand, the President’s about face is consistent with how he’s previously responded to acute market instability. On the other hand, “winding down” is completely incongruent with recent messaging and reports of additional US Marine Corp deployments to the Middle East. Trump continued with his confounding post: “The Hormuz Strait will have to be guarded and policed, as necessary, by other Nations who use it — The United States does not! If asked, we will help these Countries in their Hormuz efforts, but it shouldn’t be necessary once Iran’s threat is eradicated. Importantly, it will be an easy Military Operation for them.”
Abandoning efforts to open the Strait of Hormuz would at this point throw Colin Powell’s “You break it, you own it” completely on its head. Already fraught relations with “allies” would surely sink to new lows. It’s difficult to imagine U.S. and Israeli bombing operations easing anytime soon. And so long as the attacks and assassinations continue, Iran will maintain its pressure point on Gulf tanker traffic. Despite incredible U.S./Israeli military success, the IRGC demonstrated this week that they retain the capacity to throw world energy markets into complete chaos.
“Expect the unbelievable” is a CBB theme for 2026. Well, this is an unbelievable mess. I wouldn’t bet on global financial markets having weeks to sort through it all. And the midterms loom. The President has extremely difficult decisions to make. It’s hard to believe the hard-line Iranian regime will be allowed to regroup, rebuild and rearm – with a new missile arsenal surely pointed directly at the Strait of Hormuz and Gulf energy infrastructure. But efforts to bomb and strangle the regime into submission seem certain to at some point elicit scorched earth mayhem throughout the Gulf.
Market stability and the global economy today hang in the balance. It’s not easy to envisage a more uncertain environment. Global finance is in the initial phase of what I expect to be a protracted and challenging deleveraging period. Short squeeze and hedge unwind rallies will add to instability. And with our nation at war and critical midterms only months away, strange market trading dynamics would not be surprising. But there are now identifiable cracks. Dams could start giving way at any time.
For the Week:
The S&P500 fell 1.9% (down 5.0% y-t-d), and the Dow slumped 2.1% (down 5.2%). The Utilities sank 5.0% (up 4.4%). The Banks rallied 1.6% (down 9.0%), and the Broker/Dealers recovered 1.0% (down 5.9%). The Transports increased 0.7% (up 2.8%). The S&P 400 Midcaps declined 1.3% (down 0.3%), and the small cap Russell 2000 fell 1.7% (down 1.8%). The Nasdaq100 dropped 2.0% (down 5.4%). The Semiconductors added 0.3% (up 8.3%). The Biotechs declined 1.0% (down 7.3%). With bullion slumping $527, the HUI gold index sank 14.7% (down 2.6%).
Three-month Treasury bill rates ended the week at 3.617%. Two-year government yields surged 18 bps to 3.90% (up 43bps y-t-d). Five-year T-note yields rose 15 bps to 4.01% (up 28bps). Ten-year Treasury yields gained 10 bps to 4.38% (up 21bps). Long bond yields increased four bps to 4.94% (up 10bps). Benchmark Fannie Mae MBS yields surged 19 bps to 5.47% (up 43bps).
Italian 10-year yields surged another 18 bps to 3.96% (up 41bps y-t-d). Greek 10-year yields jumped 16 bps to 3.94% (up 50bps). Spain's 10-year yields gained eight bps to 3.58% (up 29bps). German bund yields increased six bps to 3.04% (up 19bps). French yields rose eight bps to 3.76% (up 19bps). The French to German 10-year bond spread widened about two to 72 bps. U.K. 10-year gilt yields surged 17 bps to 4.99% (up 52bps). U.K.’s FTSE equities index sank 3.3% (down 0.2% y-t-d).
Japan’s Nikkei 225 Equities Index declined 0.8% (up 6.0% y-t-d). Japan’s 10-year “JGB” yields added two bps to 2.28% (up 21bps y-t-d). France’s CAC40 dropped 3.1% (down 5.9%). The German DAX equities index sank 4.6% (down 8.6%). Spain’s IBEX 35 equities index fell 2.0% (down 3.4%). Italy’s FTSE MIB index slumped 3.3% (down 4.7%). EM equities were under pressure. Brazil’s Bovespa index declined 0.8% (up 9.4%), and Mexico’s Bolsa index dropped 2.4% (down 0.4%). South Korea’s Kospi rallied 5.4% (up 37.2%). India’s Sensex equities index was little changed (down 12.5%). China’s Shanghai Exchange Index slumped 3.4% (down 0.3%). Turkey’s Borsa Istanbul National 100 index slipped 0.3% (up 15.9%).
Federal Reserve Credit increased $11.5 billion last week to $6.603 TN, with a 14-week expansion of $113 billion. Fed Credit was down $2.287 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.876 TN, or 77%. Fed Credit inflated $3.792 TN, or 135%, since November 7, 2012 (697 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped $21.0 billion last week to $3.025 TN - the low back to January 2012. “Custody holdings” were down $279 billion y-o-y, or 8.4%.
Total money market fund assets (MMFA) expanded $38.7 billion to a record $7.886 TN - with a 35-week surge of $834 billion, or 17.5% annualized. MMFA were up $854 billion, or 12.2%, y-o-y - having ballooned a historic $3.272 TN, or 70.6%, since October 26, 2022.
Total Commercial Paper declined $14.7 billion to $1.395 TN. CP expanded $11 billion, or 1.0%, y-o-y.
Freddie Mac 30-year fixed mortgage rates jumped 11 bps to 6.22% (down 45bps y-o-y). Fifteen-year rates increased four bps to 5.54% (down 29bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate down four bps to 6.41% (down 41bps).
Currency Watch:
March 17 – Bloomberg: “Chinese companies are boosting hedges through foreign‑exchange derivatives, pushing outstanding forward contracts to record levels, as the yuan’s surge threatens to erode exporters’ overseas earnings. Net outstanding forward settlement contracts reached $107 billion at the end of February, the highest level since records began in 2010, according to… the State Administration of Foreign Exchange.”
For the week, the U.S. Dollar Index declined 0.7% to 99.647 (up 1.3% y-t-d). On the upside, the Norwegian krone increased 2.1%, the Swedish krona 1.5%, the euro 1.4%, the New Zealand dollar 1.0%, the British pound 0.8%, the Australian dollar 0.6%, the Swiss franc 0.4%, the Japanese yen 0.3%, the Mexican peso 0.3%, the Brazilian real 0.2%, and the Singapore dollar 0.1%. On the downside, the South African rand declined 0.6%, and the South Korean won slipped 0.4%. China's (offshore) renminbi was unchanged versus the dollar (up 1.22% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index slipped 0.6% (up 22.3% y-t-d). Spot Gold dropped 10.5% to $4,492 (up 4.0%). Silver sank 15.7% to $67.945 (down 5.2%). WTI Crude slipped 48 cents, or 0.5%, to $98.23 (up 71%). Gasoline jumped another 8.0% (up 92%), while Natural Gas declined 1.1% to $3.095 (down 16%). Copper lost 6.6% (down 5%). Wheat dropped 3.8% (up 17%), while Corn rose 2.9% (up 6%). Bitcoin was little changed at $70,539 (down 19.5%).
Market Instability Watch:
March 16 – Reuters (Pritam Biswas and Arasu Kannagi Basil): “Private-credit market jitters have spilled onto Wall Street, with some major U.S. banks tightening lending while the funds have capped withdrawals as mounting concerns prompt firms to curb risk and brace for further strain. Sentiment had been dented by concerns over valuations and transparency, as well as cases such as the bankruptcy of auto-parts supplier First Brands and car dealership Tricolor, where some private-credit lenders held exposure. U.S. banks had almost $300 billion in loans outstanding to private-credit providers as of June 2025, and a further $285 billion lent to private-equity funds, along with $340 billion in unused lending commitments to those borrowers, according to… Moody’s.”
March 19 – Bloomberg (Alyce Andres): “US bond traders are no longer pricing in rate cuts in 2026 and that’s forcing an unwind of the popular steepener trade. The move got its impetus after the Bank of England said it would be ready to act against inflation — sending 2-year yields in the UK up more than 35 bps. That’s spilling into the US, where yields on 2s rose as much as 18 bps before retreating somewhat. That narrowed the benchmark spread between 2s10s to ~36.5 bps, the tightest since last April…”
March 19 – Bloomberg (John McCrank): “JPMorgan… credit analysts project US high-yield bond funds to post the biggest net outflows since the tariff-related market turmoil in April, as credit spreads widened amid the conflict in Iran and over its fallout. The bank estimates a $3.7 billion outflow for US junk funds for the week ended March 18, based on daily fund flows, which, if met, would be the largest since the week of April 9. The outflow would also extend the streak of withdrawals to six consecutive weeks, matching the streak through Jan. 15, 2025.”
March 16 – Bloomberg (Jack Ryan): “The worst silver sell-off in history at the end of January was accelerated by the growing footprint of retail investors in leveraged exchange-traded funds, according to the Bank for International Settlements. The white metal collapsed as much as 36% on Jan. 30, its biggest one-day wipeout on record. The abrupt plunge, following a rapid surge of more than 50% in just a few weeks, points to the destabilizing role of retail flows that were amplified by forced sales from leveraged ETFs, the… institution said in its quarterly report…”
March 16 – Financial Times (Martin Arnold): “A lengthy conflict in the Middle East would threaten to cause a further surge in interest rates and a sell-off in financial markets that could magnify the wider damage to the global economy, the Bank for International Settlements has warned. A war that lasts longer or widens more than expected risks putting pressure on asset prices and undermining governments’ fiscal positions, according to… the BIS… ‘If the conflict is prolonged, financial amplifications could magnify the macroeconomic impacts,’ said Hyun Song Shin, head of the bank’s economics and monetary department… ‘A spike in interest rates could put pressure on rich asset price valuations,’ he said. ‘Rising financing costs for governments and the need to issue more debt could undermine fiscal sustainability given already strained public finances in many countries’.”
March 17 – Bloomberg (Edward Clark): “The outbreak of hostilities in the Middle East and surging energy costs are expected to exacerbate soaring levels of financial distress among European corporates, according to Alvarez & Marsal Inc. Even before the US and Israel began their attacks on Iran on Feb. 28, financial strain among the continent’s businesses was at a four-year high, a new report from the consultancy… said.”
March 17 – Financial Times (Rachel Rees and Emily Herbert): “Investors have piled into cash at the fastest rate since the Covid pandemic, as the war in Iran and worries over private credit puncture a previously bullish mood in markets. Average cash holdings in portfolios rose to 4.3% of assets under management in March, up from 3.4% in February and the biggest monthly jump since March 2020, according to a… survey of fund managers by Bank of America. The figures mark a sharp reversal since January, when cash levels were at a record low of 3.2%...”
U.S. Credit Trouble Watch:
March 16 – New York Times (Richard Bookstaber): “At the start of the 2008 financial crisis, I was at a hedge fund. By its end, I was at the U.S. Treasury. At both, I worked with people only a few years out of college. The drama of 2008 was all they knew about financial markets. ‘Remember what’s happening,’ I told them. ‘You’ll never see anything like this again.’ Now I’m not so sure. Maybe they’ll see worse. We have returned to a period of risk, one rife with the sort of pressures that have led to major financial crises. This time, the risks are spread across industries, markets and nations: artificial intelligence, the roughly $2 trillion private credit industry, stock markets, Taiwan and now Iran. These risks are analyzed one by one, news article by news article. We understand them in isolation. Yet they are different entry points into the same underlying structure — a complex and tightly coupled system where the specific source of stress matters less than how quickly that stress can spread. Signs of systemic strain are emerging.”
March 16 – Wall Street Journal (Jonathan Wei): “Imagine opening a black box, only to find 5,000 more black boxes inside. Investors are fleeing the $42 billion Cliffwater Corporate Lending Fund, among the latest of its kind to limit redemptions for shareholders. Many investors appear to believe the private-credit fund’s official net asset value is inflated, prompting them to sell their shares, or try to. One reason many are rushing for the exits: It can be difficult for shareholders to understand what they own. The disclosures at funds like this often are as impenetrable as they are voluminous. The Cliffwater fund’s most recent quarterly report listed more than 3,600 individual holdings, including direct loans to middle-market corporate borrowers and ownership stakes in other private-credit funds. Most of the names aren’t recognizable, such as Accordion Partners, ALKU Intermediate Holdings or ZB Holdco. The fund also listed about 1,700 unfunded loan commitments to almost 1,000 different borrowers totaling $6.9 billion, which is money the fund would have to supply on demand.”
March 17 – Bloomberg (Rene Ismail and Emily Graffeo): “Default rates in direct lending will climb to 8% as advances in artificial intelligence continually disrupt the software industry, according to Morgan Stanley. While AI disruption has yet to impact private credit fundamentals in a ‘material way,’ elevated leverage and looming maturity walls within the software sector may push default rates near peak levels unseen since the pandemic, a team of analysts including Joyce Jiang said... ‘Credit fundamentals of software loans are challenged with the highest leverage and the lowest coverage ratios across major sectors,’ the strategists wrote. While defaults have moderated across public and private loan markets, they added, defaults are only set to climb further as AI disruption unfolds.”
March 16 – Financial Times (Amelia Pollard): “The private capital industry’s problems are far worse than Wall Street has acknowledged, as traditional metrics obscure weaknesses in the leveraged buyout market, according to a top credit hedge fund. A ‘substantial portion’ of the private equity industry is already ‘stressed or distressed’, said Tony Yoseloff, managing partner and chief investment officer at credit hedge fund Davidson Kempner Capital Management. ‘You’re not looking at a problem five years from now, you’re looking at a problem that exists today.’ In new research…, the hedge fund, which manages more than $38bn of assets, gives a broad diagnosis of growing risks in the private capital industry, and why it soon expects buyouts from the last decade to crack. The hedge fund argues excessive leverage, weak cash flows and loose debt contracts have converged to create a ripe environment for corporate defaults.”
March 18 – Financial Times (Toby Nangle): “Alphaville encounters all sorts of estimates from credentialised organisations as to the size of private credit fund borrowings, the integrity of which we don’t doubt. But answers vary. So it’s good to see the OFR do thorough work, and appreciate them describing their approach and data sources in depth. Their answer to the question ‘how much lending exposures do banks and nonbanks have to private credit funds’ is somewhere between $410bn and $540bn. Of this, $195bn is to business development companies… And somewhere between $215-345bn is accounted for by bank and nonbank lending… The range is so wide because while reported borrowings totalled $215bn at year-end 2024, the OFR’s analysis found the gap between gross and net asset values implied borrowing of $345bn.”
March 18 – Bloomberg (Rene Ismail): “S&P Global Ratings lowered its outlook on Cliffwater LLC’s flagship private credit fund to negative from stable, citing elevated redemption requests that risk putting pressure on its liquidity. The roughly $32 billion Cliffwater Corporate Lending Fund’s decision to meet 7% of withdrawal requests in the first quarter was higher than the 5% minimum, and the second quarter in a row it topped that level, S&P said… Analysts warned if that ‘were to constitute the new norm and not the exception,’ it could strain the fund and potentially spur a downgrade. ‘We view the 5% redemption cap as an important guardrail for liquidity,’ the S&P analysts wrote… ‘Raising the redemption cap to 7% per quarter would weaken our opinion of the fund’s liquidity’.”
March 16 – Wall Street Journal (Ben Glickman): “One lending blowup is showing how America’s banks helped fuel the private-credit boom, and what could happen in its unraveling. Traditional lenders… have touted their efforts to get a slice of Wall Street’s newest action. But the details of the exposure are murky, and investors have grown skittish about banks’ connections to private credit this year. A dispute between Southwest bank Western Alliance and investment bank Jefferies Financial Group that spilled into the open this month gives fresh clues to how banks are tied to the type of nonbank lending known as private credit and how messy it might be if trouble gets worse. Western Alliance sued for breach of contract and alleged a Jefferies subsidiary didn’t pay back part of a loan connected to now-bankrupt auto-parts supplier First Brands… ‘The concerns are because it’s such a black box,’ said Bobby Reddy, a professor of corporate law and governance at the University of Cambridge. At the heart of the Western Alliance and Jefferies fight is a common setup. Western Alliance had a loan to an entity Jefferies created to fund First Brands known as a special-purpose vehicle, or SPV.”
March 18 – Wall Street Journal (Peter Rudegeair): “A fund holding consumer and small-business loans made by companies including Affirm and Block is the latest corner of the private-credit market to come under stress. Stone Ridge Asset Management told clients in the fund last week that recent redemption requests were so high that it would honor only 11% of the amount investors wanted back... That suggests that investors’ concerns about private credit are broadening. Unlike other private-credit funds that experienced a flight of investors in recent weeks, Stone Ridge’s fund didn’t hold loans to software makers or other corporate sectors that investors fear will be displaced by… artificial intelligence. The Stone Ridge Alternative Lending Risk Premium Fund buys whole loans and securities backed by loans made by fintech lenders. That includes buy-now-pay-later loans from Affirm, personal loans from LendingClub and Upstart and loans that payments companies like Block and Stripe offer to merchants using their platforms.”
March 17 – Bloomberg (Scott Carpenter): “Investors are demanding higher risk premiums to own the debt of business development companies, reflecting their anxiety around private credit exposure, according to Barclays Plc. A broad-based index of the debt shows spreads climbing 80 bps to 260 bps this year, reaching ‘rarefied territory,’ strategists including Corry Short wrote... Unsecured bonds of BDCs have also ‘meaningfully’ underperformed collateralized loan obligations — an asset class that offers the best point of comparison… ‘CLOs are reasonable comps for BDCs because both own corporate loan assets financed with debt and equity obtained through the capital markets,’ the strategists wrote. ‘Our view, therefore, is the pricing of those instruments should resemble each other.’ But since January, spreads on broadly syndicated loan CLOs have widened about 20 bps, compared to nearly 75 bps for unsecured BDC debt.”
March 17 – Bloomberg (Davide Scigliuzzo): “The $1.8 trillion private credit industry may need years to work through an ‘intense yet warranted reset’ that has caused a wave of redemptions from some of the market’s biggest funds, according to Sixth Street Partners. ‘While some may believe today’s volatility is only a minor episode to be weathered, we believe there is going to be an honest reckoning for the sector resulting in a healthier and more resilient direct lending industry,’ Sixth Street Specialty Lending, one of the firm’s funds, wrote in a letter to investors…”
March 15 – Financial Times (Antoine Gara and Eric Platt): “Wealthy individuals have sought to pull more than $10bn from some of the largest private credit funds in the first quarter, prompting investment managers to limit withdrawals and threatening to stall one of Wall Street’s most important sources of growth. Debt funds managed by powerhouse firms including Blackstone, BlackRock, Cliffwater, Morgan Stanley and Monroe Capital have agreed to honour about 70% of the $10.1bn of redemption requests they have faced… That number is expected to rise over the next two weeks, as funds managed by Ares Management, Apollo Global, Blue Owl, Oaktree and Goldman Sachs tally up how many of their investors are heading for the exits.”
March 18 – Bloomberg (Nabila Ahmed): “Pacific Investment Management Co. is staying away from loans being put up for sale amid the tumult in the $1.8 trillion private credit market because they’re ‘pretty bad,’ according to its president Christian Stracke. As some funds look to offload assets to meet investor demand for redemptions, the prices being asked for the assets are still too high given the risk, Stracke said… ‘A lot of the loans that are out for sale right now are pretty bad loans,’ Stracke said. ‘We’ve seen some blocks of those. They’re not clearing at a price yet where we would be interested in buying them’.”
March 17 – Financial Times (Michelle Chan and Eric Platt): “JPMorgan… and Wall Street banks suspended more than $5bn of debt sales for customer service software group Qualtrics amid investor scepticism over whether its business model can withstand AI disruption. The decision to pause the financing is a setback for Silver Lake and the Canada Pension Plan Investment Board, which bought Qualtrics for $12.5bn in 2023, and for JPMorgan and a group of Wall Street banks that had agreed to fund its latest deal. Investors will be scrutinising whether JPMorgan can launch the $5.3bn transaction before Qualtrics needs to wire cash to close its $6.75bn acquisition of… Press Ganey Forsta. If it does not, the bank and nearly a dozen other lenders who had agreed to provide so-called bridge financing will be forced to come up with the capital themselves, known in industry parlance as a ‘hung deal’.”
Global Credit Watch:
March 18 – Financial Times (Emma Dunkley, Simon Foy and Lee Harris): “Bank of America has withdrawn a recommendation that clients bet against European companies potentially exposed to ‘private credit shocks’, saying that it made ‘factual inaccuracies’. The US bank sent a note to customers… warning that the recent sales commentary it had circulated, in which it advised clients to bet against a basket of stocks including Deutsche Bank and Partners Group, had been pulled ‘based on a review of new information’ and because of factual errors. The bank added: ‘Those views do not reflect those of BofA Research or the broader organisation. We apologise to the companies that were inaccurately referenced.’ The reversal comes just hours after the FT revealed that BofA pitched clients the idea that European stocks exposed to private credit had 30% ‘downside risk’ compared with US rivals…”
Iran War Watch:
March 19 – Reuters (Rami Ayyub and Humeyra Pamuk): “Israel’s attack on an Iranian gas field on Wednesday was coordinated with the United States but is not likely to be repeated, three Israeli officials said, despite President Donald Trump saying he did not know about it in advance. The attack on Iran’s South Pars gas field drew an Iranian aerial assault on energy infrastructure in Qatar and across the Middle East, marking the biggest escalation in the U.S.-Israeli war on Iran. On Wednesday night, Trump said in a social media post that Washington ‘knew nothing about this particular attack’ and that Israel would not attack the gas field further unless Iran again attacked Qatar.”
March 17 – Financial Times (Malcolm Moore and Rachel Millard): “Iran is capable of sharply escalating its campaign against energy infrastructure in the Gulf, analysts have warned, after Tehran carried out its first successful strike on an operational oil and gasfield. ‘The gloves haven’t come off yet when it comes to striking energy infrastructure,’ said Richard Bronze, head of geopolitics at consultancy Energy Aspects. ‘The Iranians are now hitting a growing list of targets across the Gulf states and that strategy may have further steps to come.’ Iran on Monday successfully struck the Shah oil and gasfield in southern Abu Dhabi.”
March 19 – Reuters (Maha El Dahan, Andrew Mills and Yousef Saba): “Iranian attacks have knocked out 17% of Qatar’s liquefied natural gas (LNG) export capacity, causing an estimated $20 billion in lost annual revenue and threatening supplies to Europe and Asia, QatarEnergy's CEO and state minister for energy affairs told Reuters... Saad al-Kaabi said two of Qatar’s 14 LNG trains and one of its two gas-to-liquids (GTL) facilities were damaged in the unprecedented strikes. The repairs will sideline 12.8 million tons per year of LNG for three to five years, he said… ‘I never in my wildest dreams would have thought that Qatar would be - Qatar and the region - in such an attack, especially from a brotherly Muslim country in the month of Ramadan, attacking us in this way,’ Kaabi said.”
March 19 – Wall Street Journal (Summer Said, Rebecca Feng and Alexander Ward): “Escalating attacks on Persian Gulf oil-and-gas infrastructure are sending the U.S.-Israeli war with Iran into a dangerous new phase that threatens to worsen the crisis over global energy supplies. Israel struck at the crown jewel of Iran’s energy industry on Wednesday—the giant South Pars gas field that Iran shares with Qatar and is by far the largest in the world. Iran retaliated with two attacks on a major gas hub in Qatar just across the Gulf and a missile barrage fired at the Saudi capital, Riyadh… Israel and Iran had already hit energy facilities throughout the nearly three-week-old war, but Wednesday’s attacks struck some of the world’s most important hubs and raised the prospect of tit-for-tat volleys against oil-and-gas facilities.”
March 19 – Financial Times (Malcolm Moore, Rachel Millard and Verity Ratcliffe): “As emergency workers sifted through the smouldering wreckage at Qatar’s Ras Laffan complex…, traders in Europe and Asia were waking up to a fresh energy crisis. In normal times, a fifth of the world’s supply of liquefied natural gas (LNG) flows from Ras Laffan, a vast industrial site almost three times the size of Paris built over three decades at a cost of hundreds of billions of dollars. LNG terminals are some of the biggest and most complex constructions in human history, and Ras Laffan is the largest of them all, turning Qatar’s huge gas reserves into a super-chilled fuel that can be shipped around the world. At least before the Iranian missiles arrived. ‘I woke up this morning and thought, ‘No, please no,’’ said Anne-Sophie Corbeau, a former head of gas analysis at BP who is now at Columbia University’s Center on Global Energy Policy. ‘This has always been my nightmare scenario, my Armageddon scenario, the one I didn’t want to happen’.”
March 16 – Wall Street Journal (Anat Peledv and Omar Abdel-Baqui): “Israel’s ground invasion of Lebanon opens a new front in a widening Middle East war, expanding its campaign against Iran by moving against one of its most powerful regional allies, Hezbollah, and stretching its military across an unprecedented number of conflict zones. Israel said on Monday that it launched a ground operation in a southern swath of Lebanon and was prepared for a prolonged campaign. Israel’s defense minister said Lebanese residents will be unable to return to the area until Israel determines it has removed the threat posed by Hezbollah… The defense minister, Israel Katz, said the operation would be similar to the Israeli campaign in Gaza…”
March 17 – Wall Street Journal (Alistair MacDonald): “Last week as Iran laid mines in the Persian Gulf, four of the U.S. Navy’s few specialist minesweepers were on the move—to Philadelphia and their eventual decommissioning. The Navy hasn’t had a significant mine clearing capability in decades, former naval officers and analysts said. Now it faces having to deal with the risk of mines in one of the world’s most important waterways while the West’s thinking on how to deal with the seaborne threat is in flux… ‘The U.S. Navy has neglected minesweeping, and our limited number of hulls will make it difficult to credibly escort oil tankers in a contested environment,’ said Eliot Cohen, a scholar at the Center for Strategic and International Studies think tank.”
March 16 – Financial Times (Charles Clover): “The US Navy has said that two of its three Gulf-based warships with mine-clearing capabilities have travelled 4,000 miles to Malaysia for a ‘logistical stop’. The decision to move the ships comes as Iran’s ability to lay sea mines in the Strait of Hormuz has raised fears that Tehran could block the strategic waterway through which 20% of the world’s oil exports pass.”
March 17 – Bloomberg (Tony Capaccio and Courtney McBride): “The USS Gerald R. Ford aircraft carrier is leaving the fight with Iran and heading back to port, a US official familiar… said, after a fire broke out in its laundry area and left at least two sailors with non-life-threatening injuries. The Ford will travel from its current location in the Red Sea to Souda Bay, on the Greek island of Crete… The ship had stopped in Souda Bay in late February on its way to the Red Sea.”
March 14 – Politico (María Paula Mijares Torres): “The US Embassy in Baghdad told Americans… to leave Iraq immediately following a series of attacks targeting US nationals. ‘US citizens should leave Iraq now,’ the Embassy said... ‘US citizens choosing to remain in Iraq are strongly encouraged to reconsider in light of the significant threat posed by Iran-aligned terrorist militia groups’.”
Iran War Ramifications Watch:
March 19 – Axios (Dave Lawler): “Defense Secretary Pete Hegseth confirmed the Pentagon would ask Congress for more money to wage war in Iran, though he said the reported $200 billion figure ‘could move.’ A request on that scale would likely face stiff opposition from many Democrats and some Republicans, given the unpopularity of the war and the fact that it would be in addition to the Pentagon's existing $1 trillion budget… Hegseth confirmed the Pentagon was seeking more money to accelerate production of weapons systems the U.S. and Israel have expended during the war, and ensure adequate stockpiles in future… ‘As far as $200 billion I think that number could move,’ Hegseth said… ‘Obviously it takes money to kill bad guys, so we’re going back to Congress and our folks there to ensure that we’re properly funded for what's been done, for what we may have to do in the future, ensure that our ammunition is refilled, and not just refilled, but above and beyond’.”
March 16 – Axios (Emily Peck): “Countries across South Asia are imposing emergency measures like rationing energy, closing universities, cutting short workweeks and even changing the way crematoriums work to deal with the fallout from the Iran war. Yes, the war is raising gas prices for Americans and causing a political headache for President Donald Trump — but it’s also creating a deeper crisis abroad that governments and businesses are scrambling to manage. It’s the latest global economic shock in a turbulent decade. The 2020s have seen a pandemic, Russia’s invasion of Ukraine and the resulting inflation, and, more recently, Trump’s ‘Liberation Day’ tariffs, which rocked markets and panicked some countries. The laws of supply and demand make the math fairly straightforward here: 20% of the world’s oil and other energy products go through the Strait of Hormuz, and Iran has effectively shuttered traffic.”
March 18 – Financial Times (Alice Hancock): “The Middle East war has turned container shipping into a ‘wild west’, with carriers adding thousands of dollars in charges and dumping containers at far-flung ports… The effective closure of the Strait of Hormuz following Iranian strikes and fears of Houthi attacks in the Red Sea have prompted shipping lines to suspend bookings and reroute goods. Fire after strikes on Sunday over Dubai’s main port, Jebel Ali, has triggered further cancellations and congestion. The largest shipping groups, including MSC, Maersk, CMA CGM and Hapag-Lloyd, have told customers they reserve the right to invoke a 19th-century rule to allow them to leave containers at the nearest available port at their client’s expense. Charges for shipping containers, meanwhile, have risen as much as fourfold on certain routes thanks to war-risk insurance costs and fuel surcharges.”
March 18 – Politico (Ben Munster and Frederike Holewik): “Anxiety is growing over Europe’s unusually low gas storage levels as the war in Iran threatens to spark a fight among countries over dwindling global energy supply. The EU requires member countries to maintain gas reserves at 90% of capacity by the winter — a measure brought in after Russia’s 2022 invasion of Ukraine. But this year’s colder-than-average winter depleted those reserves to under 30% as of March, the lowest since 2022.”
March 18 – Associated Press (Jack Dura): “Tennessee farmer Todd Littleton expects to pay $100,000 more for fertilizer this season, a 40% spike from his bill last year thanks to the war in Iran — and he is scrambling to cover that extra cost. ‘The problem is, is we’re so strained financially coming into this issue,’ said Littleton, a third-generation farmer from Gibson County... ‘We have had a couple of record losses the last couple years, so everyone’s kind of grabbing at straws anyway, and then to have input prices increase yet again, it just really couldn’t happen at a worse time’.”
March 13 – Financial Times (Susannah Savage): “The Middle East war is close to triggering a global food shock worse than that unleashed by Russia’s 2022 full-scale invasion of Ukraine, experts have said, as fertiliser shortages threaten food production on multiple continents. Iranian attacks have knocked out swaths of Middle Eastern production of urea, the world’s most widely used nitrogen fertiliser, while gas shortages have forced fertiliser producers across south Asia to cut output. That means that of the 2.1mn tonnes of urea — the world’s most widely used nitrogen fertiliser — that would normally have been loaded for export over the past two weeks, about half has been disrupted. At the same time, more than 1.1mn tonnes of fertiliser and fertiliser inputs, including 570,000 tonnes of urea, is currently stuck in the Gulf, either being loaded or already on ships…”
March 16 – Bloomberg: “China is tightening its curbs on fertilizer exports as the war in Iran disrupts trade of key crop nutrients, driving up prices globally. The government has asked exporters to halt outbound shipments of nitrogen-potassium fertilizer blends, people familiar… said. Beijing also reiterated existing export restrictions on urea, quashing traders’ hopes that new sales quota would be issued soon, they said. The moves are part of an effort to secure domestic supplies and stabilize prices as farmers in the agricultural powerhouse gear up for spring planting and demand peaks.”
March 17 – Reuters (Rozanna Latiff): “Semiconductor firms in Malaysia are monitoring risks from disruptions to helium supplies due to the conflict in the Middle East, though the situation has not caused any operational interruptions so far, an industry executive told Reuters. Helium prices have risen sharply due to the disruption of natural gas processing in Qatar by the U.S.-Israel war against Iran. Helium - critical for industries such as semiconductors and medical imaging - is a byproduct of LNG processing, and any slowdown in output is expected to affect global supplies.”
March 16 – Bloomberg (Mirette Magdy): “The Iran war threatens to deal significant blows to the Gulf’s biggest economies, including Saudi Arabia, the United Arab Emirates and Qatar, if it doesn’t end soon. Qatar and Kuwait could each see their gross domestic product contract by 14% this year should the conflict continue through to the end of April, which would mean a two-month effective halt in oil and natural flows through the Strait of Hormuz, according to Goldman Sachs… That’d be the worst economic slump for those two countries since the early 1990s, when Iraq’s invasion of Kuwait triggered the Gulf War.”
March 19 – AFP: “Russia… blamed Israel for what it called a ‘targeted’ airstrike that wounded a TV crew from state-run RT in Lebanon amid ongoing Israeli strikes and ground operations in the country’s south. The Ruptly video agency, a subsidiary of RT, posted footage showing an explosion and plumes of smoke rising through the air metres behind RT’s reporter, who was wearing a bulletproof vest with a ‘Press’ sign on it as he delivered an on-air report.”
Trump Administration Watch:
March 16 – Axios (Jim VandeHei and Mike Allen): “For five years in office, President Trump has operated with intuition, impulse and improvisation. The Iran war, now entering Week 3, is the first time Trump’s style has made it impossible for him to easily talk or improvise his way out. Trump could wind up trapped between his caprice and the realities of war. He expects a quick, clear victory. But unlike tariffs that can be swiftly imposed and rescinded, the war’s outcome is beyond unilateral control and quick fixes. And Iran gets a say. Trump is working to help break the Persian Gulf oil jam. But in doing so, he risks getting caught in an ‘escalation trap,’ where a stronger force is incentivized to keep attacking to demonstrate dominance amid diminishing returns. A senior Trump administration official practically admitted as much, telling Axios’ Marc Caputo: ‘The Iranians f*cking around with the Strait makes [Trump] more dug in’.”
March 17 – Politico (Megan Messerly): “When the U.S. started firing Tomahawk missiles at Iran late last month, many of President Donald Trump’s allies hoped it would be a quick, surgical operation, similar to last year’s strike against Iran’s nuclear facilities or the ouster of Venezuelan dictator Nicolás Maduro in January. Though uneasy, they were reassured by the belief that Trump’s open-ended objectives gave him the flexibility to declare victory whenever he saw fit. Now, more than two weeks into the campaign, some of those allies believe the president no longer controls how, or when, the war ends. They fear Iran’s attacks on oil tankers in the Strait of Hormuz… are boxing Trump into a situation where escalating the conflict — potentially even putting American boots on the ground — becomes the only way to credibly claim victory. ‘We clearly just kicked [Iran’s] ass in the field, but, to a large extent, they hold the cards now,’ said one person close to the White House… ‘They decide how long we’re involved — and they decide if we put boots on the ground. And it doesn’t seem to me that there’s a way around that, if we want to save face’.”
March 17 – Financial Times (Edward Luce): “Wars, AI drama, even the odd peace prize — the world had plenty on its bingo card for 2026. But it did not include Donald Trump urging China to send ships to the Middle East. The US president’s request for Chinese help is a black swan moment. In an age of great power rivalry, the hegemon is inviting its main challenger to help extract it from the world’s most combustible region. Read that again. Then ponder where China’s incentive lies. Why interrupt your enemy while he is making a mistake? That China has no intention of sending minesweepers to the Strait of Hormuz is clear. The question is whether Xi Jinping wants to see Trump backed into a corner. It is one thing for China to gain a diplomatic edge over the US; quite another to test whether Trump is Dr Strangelove… The worse things go for Trump in the Gulf, the more tempted he will be to take risks. George W Bush’s 2003 invasion of Iraq ended up being a geopolitical windfall for China. American boots on the ground in Iran could be at least as big.”
March 17 - Associated Press (Aamer Madhani, Darlene Superville and Michelle L. Price): “President Donald Trump said Tuesday NATO and most other allies have rejected his calls to help secure the Strait of Hormuz, grousing that he has been unable to rally support behind his war of choice in Iran that he insists he’s conducting for the good of the world, even if it doesn’t appreciate his effort. Trump, who has been pressing allies to help safeguard the critical waterway to ease a chokepoint on the region’s oil exports, fumed that the U.S. is not getting support ‘despite the fact that we helped’ NATO ‘so much,’ and said that it was in allies’ interest to prevent Iran from securing a nuclear weapon. Trump’s indignant response to allies’ refusal to get involved in the war underscored that the conflict… is one the international community is looking to the U.S. leader to sort out himself after he launched it without consultation.”
March 16 – Financial Times (Lauren Fedor and Demetri Sevastopulo): “Donald Trump has asked Beijing to postpone his upcoming meeting with Xi Jinping in China, casting doubt on the long-awaited summit between the US president and his Chinese counterpart. Trump told reporters… that he wanted to delay the summit by a month as he grapples with the war in Iran. He had been scheduled to leave for Beijing in just over two weeks. ‘I’d love to but because of the war, I want to be here,’ Trump said, adding the White House had requested Beijing ‘delay’ the visit by ‘a month or so’. ‘It’s very simple. I have got a war going on,’ he added.”
March 16 – Reuters (Daniel Trotta): “U.S. President Donald Trump escalated his rhetoric against Cuba…, saying he expected to have the ‘honor’ of ‘taking Cuba in some form’ and that ‘I can do anything I want’ with the neighboring country. The threatening statements come even as Cuba and the United States have opened talks aimed at improving their largely adverse relations, which have reached one of their most contentious moments in the 67 years since Fidel Castro overthrew what had been a close U.S. ally. ‘I do believe I’ll be… having the honor of taking Cuba. That’s a big honor. Taking Cuba in some form,’ Trump told reporters… ‘I mean, whether I free it, take it. Think I can do anything I want with it. You want to know the truth,’ Trump told reporters…”
March 18 – Bloomberg (Felice Maranz and Scott Carpenter): “Shares of Fannie Mae and Freddie Mac, down about 70% in the last six months, hit their lowest level in more than a year as investors cast doubt on the Trump administration’s efforts to sell more stock in the mortgage-finance giants to the public. The shares have been on a steep decline since mid-September, shortly after optimism peaked that a public offering for the agencies could come in 2025. That didn’t happen.”
March 19 – Bloomberg (Scott Carpenter): “GSE purchases are keeping mortgage spreads contained during the recent jump in interest rates, according to Brean Capital. ‘Without their activity, nominal spreads would most likely be in the 140s and primary rates in the 6.5% area,’ head of fixed income strategy Scott Buchta wrote... Brean estimates that spreads are above 25bps lower than otherwise because of GSE purchases.”
March 17 – Axios (Dave Lawler and Marc Caputo): “Joe Kent, who led the National Counterterrorism Center and was a top aide to intelligence director Tulsi Gabbard, became the first senior Trump administration official to resign over the war in Iran. Kent’s stinging rebuke — that Trump launched the war under pressure from Israel despite Iran posing ‘no imminent threat’ to the U.S. — underscores the discomfort some in the ‘America First’ camp feel about the war… What he’s saying: ‘I cannot in good conscience support the ongoing war in Iran. Iran posed no imminent threat to our nation, and it is clear that we started this war due to pressure from Israel and its powerful American lobby’.”
March 16 – Bloomberg (Enda Curran): “Court papers released last week related to US Attorney Jeanine Pirro’s investigation of the Federal Reserve show Chair Jerome Powell feels compelled to stay on the central bank’s Board of Governors, at least until the legal process is completed. The signal, based on comments by lawyers on both sides of the case, is the first public hint that Powell may utilize his option to stay at the central bank even after his term as chair expires in May. His term as a Fed Governor runs until January 2028. In a legal filing, the Fed’s lawyers said that Powell’s own attorney ‘made clear that, to defend the Federal Reserve’s independence, Chair Powell could not resign while the criminal investigation is pending’.”
March 19 – Bloomberg (Maria Eloisa Capurro): “Treasury Secretary Scott Bessent said Federal Reserve Chair Jerome Powell’s decision to potentially stay on at the US central bank after his term as chair expires in May would go against historic norms. ‘Only one former chair has stayed on as a governor and the president of the United States asked him to stay,’ Bessent said… Powell told reporters he had ‘no intention’ of resigning as a member of the Fed’s Board of Governors until an investigation by the Department of Justice into a building renovation project is ‘well and truly over.’ Powell’s term as Fed chair ends in May, but his term as governor extends until January 2028.”
March 19 – Bloomberg (Saleha Mohsin, Chris Strohm, Josh Wingrove and Joshua Green): “Top leaders at the Justice Department are rallying behind a US attorney’s efforts to investigate Federal Reserve Chair Jerome Powell and the White House isn’t opposing it, amping up the high-stakes clash with major implications for who will lead the central bank. President Donald Trump had been open to the idea of dropping the probe into Powell until last Friday, when a judge rejected subpoenas issued to the central bank, according to people familiar... But Trump, angered by the ruling and harboring a longstanding belief that the courts are stacked against him, is now believed by aides and allies to support a push to appeal…”
Constitution Watch:
March 17 – Associated Press (David Bauder): “Through lectures, scoldings and outright threats, President Donald Trump and his aides are ratcheting up the pressure on journalists to cover the war in the Middle East the way the administration wants. The Republican president has fumed on social media about stories he doesn’t like and berated a reporter on Air Force One. The government’s top media regulator has warned that broadcasters risk losing their licenses if they don’t stay away from ‘fake news.’ Trump and his defense secretary, Pete Hegseth, have questioned the patriotism of news outlets because of their reporting. Trump has complained about war coverage in both specific and general ways… He attacked ‘Corrupt Media Outlets’ for falling for AI-generated false reports created by Iran and said the media ‘hates to report’ how well the U.S. military has performed.”
March 16 – New York Times (Michael M. Grynbaum): “The Trump administration has unleashed a multifaceted pressure campaign against news organizations as it increasingly bristles at media coverage of a Middle East military operation that many Americans oppose. Official Pentagon briefings now include attacks on outlets like CNN, with Defense Secretary Pete Hegseth nit-picking headlines. President Trump is turning to his bully pulpit on Truth Social to accuse ‘Highly Unpatriotic ‘News’ Organizations’ of airing ‘LIES’ about the war and musing about ‘Charges for TREASON.’ The goal seems to be pressuring journalists to back off critical coverage of the war effort… And the effort has gone well beyond words. Mr. Trump’s top media regulator, Brendan Carr of the Federal Communications Commission, issued an explicit warning to broadcast television networks…, a threat that Mr. Trump said he was ‘so thrilled to see’.”
March 15 – Bloomberg (María Paula Mijares Torres): “President Donald Trump said he’s ‘thrilled’ the Federal Communications Commission Chairman Brendan Carr warned broadcasters to ‘course correct’ on news coverage or risk losing their licenses, slamming media outlets for their portrayal of the Iran war. ‘I am so thrilled to see Brendan Carr, the Chairman of the Federal Communications Commission (FCC), looking at the licenses of some of these Corrupt and Highly Unpatriotic ‘News’ Organizations, Trump wrote…, accusing media outlets of misrepresenting the latest developments of the war and spreading what he called Iranian disinformation.”
March 15 – Bloomberg (María Paula Mijares Torres): “Federal Communications Commission Chairman Brendan Carr threatened broadcasters with cancellation of their licenses if they did not ‘correct course’ on news coverage. ‘Broadcasters that are running hoaxes and news distortions — also known as the fake news — have a chance now to correct course before their license renewals come up,’ Carr said... ‘The law is clear. Broadcasters must operate in the public interest, and they will lose their licenses if they do not’.”
March 17 – Bloomberg (Greg Stohr): “US Chief Justice John Roberts said hostility toward individual Supreme Court members was creating a dangerous environment, in his first public comments since the president blasted justices who voted to strike down his global tariffs. ‘Personally directed hostility is dangerous, and it’s got to stop,’ said Roberts… Roberts didn’t mention President Donald Trump by name and said he wasn’t referring to ‘any one political perspective.’ But his comments came less than a month after an extraordinary verbal attack from Trump in response to the 6-3 ruling that upended his signature economic policy.”
Budget Watch:
March 18 – Associated Press (Fatima Hussein): “The national debt surpassed a record $39 trillion on Wednesday, a milestone that comes just weeks into the U.S.-Israeli war in Iran. The unprecedented figure highlights competing administration priorities, from passing a massive tax law and boosting defense spending and immigration enforcement to chipping away at the debt itself — the latter of which Donald Trump promised to do as both a candidate and as president.”
Trade War Watch:
March 16 – Associated Press (Ken Moritsugu and John Leicester): “China warned… U.S. President Donald Trump’s latest tariff moves could harm the countries’ trade relationship, at the end of high-level talks in Paris. Li Chenggang, China’s international trade representative, said the Chinese side had expressed serious concern about trade investigations into manufacturing in foreign countries that the Trump administration launched after the U.S. Supreme Court struck down its earlier tariffs. ‘We are concerned that the possible results of such investigations may interfere with or damage the hard-won and stable China-U.S. economic and trade relations,’ Li told journalists.”
New World Order Watch:
March 17 – Bloomberg: “Moscow and Beijing are driving closer collaboration between authoritarian states and such networks help advance repression globally, according to researchers who used AI to drill into the activities. The US-based nonprofit Action for Democracy said… its researchers built an index to track seven types of cooperation, including on funding, diplomatic activities, propaganda and tech sharing. It found that China and Russia ‘sit at the center of global authoritarian collaboration’ and were jointly involved in around half of all recorded activity. The report’s authors said that such cooperation generated compound returns because, for example, ‘surveillance infrastructure exported to one regime becomes a template for the next.’ ‘Left untracked, these dynamics risk producing a world in which repression scales across borders while democratic responses remain fragmented and reactive,’ the nonprofit said.”
March 18 – Reuters (Andreas Rinke, Ludwig Burger and John Irish): “When President Donald Trump asked countries to join a global effort against Iran and deploy ships to prise open the Strait of Hormuz… Merz told German lawmakers… he agreed Iran must not be allowed to pose a threat to its neighbours but expressed doubts about the rationale behind the U.S.-Israeli war. ‘To this day, there is no convincing plan for how this operation could succeed. Washington has not consulted us and did not say European assistance was necessary… We would have advised against pursuing this course of action as it has been pursued. Therefore, we have declared that as long as the war continues, we will not participate in ensuring freedom of navigation in the Strait of Hormuz, for example, by military means’.”
March 18 – Politico (Nette Nostlinger): “German Foreign Minister Johann Wadephul… warned of a dangerous spiral of unintended consequences if the Middle East war escalates further. ‘There is a real risk of escalation, which could plunge not only this region but the entire world into a major crisis,’ Wadephul said…”
March 18 – Wall Street Journal (Michael Nienaber): “German Chancellor Friedrich Merz called for Europe to more assertively pursue its interests in a global environment where the US under President Donald Trump and China dominate geopolitical power dynamics. Citing the European Union’s population of some 450 million people — more than quarter above that of the US — Merz said the 27-member bloc had no reason to ‘sell ourselves short.’ Instead, he said, the EU should identify its interests and leverage its economic might to ensure that they’re upheld. ‘We are learning that others depend on us as well — it is not just we who depend on them,’ Merz told lawmakers... ‘And we are learning that we can — indeed, must — use this to our advantage,’ Merz said. The comments were the most pointed yet for a German leader who has tried to navigate relations with Trump in his 10 months in office.”
March 16 – Politico (Nette Nostlinger): “Germany’s government rejected U.S. President Donald Trump’s demand that NATO allies help secure the Strait of Hormuz, declaring that the alliance had no place in the war. ‘This war has nothing to do with NATO. It’s not NATO’s war,’ Stefan Kornelius, a spokesperson for… Chancellor… Merz, told reporters... ‘NATO is a defensive alliance, an alliance for the defense of its territory,’ he added. Trump had warned NATO allies on Sunday they face a ‘very bad future’ if they refuse to help secure the Strait of Hormuz, pressing Europe to support an American effort to reopen the key maritime corridor.”
Ukraine Watch:
March 14 – Financial Times (Ben Hall, Max Seddon, Henry Foy and Amy Mackinnon): “The US-led peace process in Ukraine is fizzling out because Donald Trump is losing interest in the talks and his war against Iran is easing pressure on Russia, officials say. The conflict in the Middle East has diverted Washington’s attention from a peace deal, according to four EU diplomats... At the same time, the diplomats said, it was benefiting Russia through higher oil prices, a suspension of US sanctions and the rapid depletion of American munitions Kyiv needed. The negotiations between Ukrainian and Russian officials… were ‘really in the danger zone’, said a senior European official. ‘A pause has indeed appeared in the talks. The Americans have other priorities, and that’s understandable,’ said Kremlin spokesperson Dmitry Peskov.”
March 18 – Telegraph (Antonia Langford): “No Russian region ‘can feel safe’ as Ukraine ramps up long-range attacks, a senior Kremlin official has said. Sergei Shoigu, a former defence minister and current secretary of the country’s security council, said Kyiv’s air strikes on Russian infrastructure had surged almost fourfold to 23,000 last year. He also said such strikes were able to reach increasingly far-flung targets. ‘The pace of weapons systems development, primarily that of unmanned drone systems, and the sophistication of the methods used to deploy them are such that no region of Russia can feel safe,” he told officials in the city of Yekaterinburg…”
U.S./Russia/China/Europe/Iran Watch:
March 17 – Wall Street Journal (Thomas Grove, Milàn Czerny and Benoit Faucon): “Russia has been expanding its intelligence sharing and military cooperation with Iran, providing satellite imagery and improved drone technology to aid Tehran’s targeting of U.S. forces in the region, people familiar… said. Russia is trying to keep its closest Middle Eastern partner in the fight against U.S. and Israeli military might and prolong a war that is benefiting Russia militarily and economically. The technology provided includes components of modified Shahed drones, which are meant to improve communication, navigation and targeting... Russia has also been drawing on its experience using drones in Ukraine, offering tactical guidance on how many drones should be used in operations and what altitudes they should strike from, said the people, who included a senior European intelligence officer. Russia has been providing Iran with the locations of U.S. military forces in the Middle East as well as those of its regional allies…”
March 15 – Politico (Carlo Martuscelli): “Russia and China are aiding Iran in a number of ways, including by providing ‘military cooperation,’ Iranian Foreign Minister Abbas Araghchi said. Araghchi called Russia and China strategic partners for Tehran during its war with the U.S. and Israel… ‘We have had close cooperation in the past, which still continues, and that includes military cooperation as well,’ said the foreign minister. Iran has had ‘good cooperation with these countries: politically, economically, even militarily,’ he added.”
March 18 – Financial Times (Editorial Board): “Russia’s Vladimir Putin called the killing of Ayatollah Ali Khamenei on the first day of US and Israeli strikes on Iran a ‘cynical murder’ that violated ‘all norms of human morality and international law’. Given the Russian president’s record, his statement reeks of cynical double standards. Since then, though, beyond reportedly providing intelligence to assist Iran’s retaliation against US and allied targets, Putin has been largely quiet about the attacks on a country with which he signed a strategic partnership last year. The Russian leader is presumably following Napoleon’s maxim: never interrupt your enemy when he is making a mistake. For now, the Iran conflict is an unintended US gift to the Kremlin.”
March 18 – Wall Street Journal (Austin Ramzy and Rory Jones): “China is a longstanding friend of Iran that has helped sustain the Islamic Republic through decades of sanctions and international isolation. Since the U.S. and Israeli militaries began striking Iran late last month, Beijing has offered Tehran limited public support, condemning the killing of the Iranian leadership while calling on all sides to stop fighting. But its longstanding support for Iran could grow increasingly critical as the war continues.”
March 14 – Wall Street Journal (Timothy W. Martin): “North Korean leader Kim Jong Un oversaw a live-fire exercise for one of his top military priorities: an upgraded rocket launcher able to fire tactical nukes… North Korea said the drill featured a dozen 600 mm, ‘ultra-precision’ rocket launchers and two artillery companies. The rockets, designed for shorter-range strikes, flew more than 220 miles before hitting an island target in the waters between the Korean Peninsula and Japan. Kim, joined by his young daughter at the Saturday exercise, boasted that no tactical weapon in the world exceeds North Korea’s.”
AI Bubble/Arms Race Watch:
March 16 – Bloomberg (Josh Saul): “US data center development has slowed because the power grid is reaching its limit to accommodate more large facilities, according to… energy consultancy Wood Mackenzie. Developers added data centers that would consume about 25 gigawatts of electricity to their project pipelines in the fourth quarter of 2025, roughly half as much as they added in the third quarter. Projected capital spending by the biggest developers will decelerate in 2026 compared with the previous year for the first time since 2023, the WoodMac report states. ‘Both utilities and grid operators are essentially putting the brakes on and making it more challenging to connect data centers,’ said Ben Hertz-Shargel, WoodMac’s head of Grid Edge and the author of the report. The enormous demand for data centers hasn’t changed, he said, but ‘there’s only so much power to go around’.”
March 16 – Bloomberg (Yoolim Lee): “A global shortage of memory chips is likely to persist another four to five years because of endemic constraints in semiconductor production, the head of South Korean conglomerate SK Group said. Leading players such as SK Hynix Inc. are expanding capacity but they’re unlikely to fully sate demand till around 2030, said Chey Tae-won, whose company controls the chipmaker. Industry-wide, supply of the basic wafers that get made into chips are lagging demand by more than 20%, Chey told reporters…”
March 17 – Reuters (Katie Paul, Jeff Horwitz and Deepa Seetharaman): “Meta is planning sweeping layoffs that could affect 20% or more of the company, three sources familiar with the matter told Reuters, as Meta seeks to offset costly artificial intelligence infrastructure bets and prepare for greater efficiency brought about by AI-assisted workers. No date has been set for the cuts and the magnitude has not been finalized…”
March 14 – Wall Street Journal (Katherine Bindley): “At a Pacific Heights open house in January, a line of people made their way up the steps of a two-bedroom, one-bath cooperative. There were 85 of them—steps, not people. Eight flights, no elevator. The property received 14 offers and sold for over $1.62 million, more than $400,000 over the asking price. While much of the U.S. housing market has been stuck in a rut, slowed by elevated mortgage rates and home prices near record highs, pockets of San Francisco are rebounding in a big way. The AI boom…”
Inflation Watch:
March 18 – CNBC (Jeff Cox): “Wholesale prices rose sharply in February, providing another sign that inflation continues to percolate even aside from rising energy costs. The producer price index… increased a seasonally adjusted 0.7% on the month... Excluding volatile food and energy costs, the so-called core PPI increased 0.5%. Economists… had been looking for increases of 0.3% for both measures. For the all-items index, prices rose faster than the 0.5% pace in January. However, the core increase was less than the 0.8% for the prior month. On a 12-month basis, headline PPI inflation was at 3.4%, the most since February 2025, while core was at 3.9%...”
March 18 – Bloomberg (Marilen Martin and Christoph Rauwald): “Consumers are set to start feeling the impact of the Iran war beyond filling up their cars, with price jumps on ingredients for everyday cleaning products, tires and animal feed. Europe’s chemical makers BASF SE and Lanxess AG are among companies raising prices significantly due to shortages and higher expenses for chemical feedstocks. The ingredients go into a broad range of home and industrial detergents, coatings as well as car tires. BASF… said its suite of products for detergents and industrial products will rise by some 30% or more. The company later announced two more price increases in Europe for chemicals needed by sectors such as agriculture to keep animal feed from rotting and in coatings for cars.”
March 16 – Bloomberg (Nicholas Lua and Yongchang Chin): “The largest oil market shock on record triggered by the war in the Middle East is set to have a greater impact on products such as jet fuel and diesel than on crude, according to Goldman Sachs... ‘Prices have rallied much more for many refined products than for crude,’ analysts Yulia Zhestkova Grigsby and Daan Struyven said... The severe disruptions seen in supplies of so-called medium-heavy crude pose the risk of lower production of diesel, jet fuel and fuel oil, they said.”
March 16 – Financial Times (Martha Muir, Jamie Smyth and Christian Davies): “US diesel prices have jumped more than a third over the past month to almost $5 a gallon as the war in Iran pinches global supplies, pushing up costs of everything from transporting goods to planting crops. Average diesel prices at the pump rose to $4.99 on Monday, a 37% increase on a month ago… It marks the highest price for diesel, a fuel that is vital for industry, since the aftermath of Russia’s full-scale invasion of Ukraine in 2022.”
March 18 – Bloomberg (Charles Gorrivan): “The price of US propane is climbing at almost twice the pace of the natural gas it’s made from, threatening even more pocketbook pain for consumers already coping with surging gasoline, diesel and power costs. The rise in a niche, household-fuel industry long insulated from international events shows how the knock-on effects of the Iran war are rippling through markets that are otherwise amply supplied. Iran’s effective blockage of tanker traffic in the Strait of Hormuz has disrupted trade in propane and other gas byproducts, prompting foreign buyers to seek alternative cargoes from the US. Propane traded at the Mont Belvieu hub in Texas has jumped roughly 20% since the war kicked off…”
March 19 – Wall Street Journal (Anna Wilde Mathews): “Nearly one in 10 people who had Affordable Care Act plans last year dropped health insurance altogether, after premium costs rose sharply because of the expiration of federal subsidies... Most of those who remained in ACA plans reported larger out-of-pocket healthcare expenses in the form of higher copays, coinsurance or deductibles, according to the survey from health-research nonprofit KFF. About one-sixth of those who still have ACA coverage, or 17%, weren’t sure they would be able to afford their new premium payments for the entire year…”
March 18 – Bloomberg (Leslie Kaufman): “US home insurance premiums are set to rise for a fifth straight year in 2026 as insurers grapple with losses from extreme weather and high rebuilding costs. The average annual premium is projected to increase 4% to about $3,057 this year, after jumping 12% in 2025, according to Insurify… The expected gain follows several years of steep growth in rates. Since 2021, premiums have climbed 46%, roughly three times as much as inflation, Insurify said.”
Federal Reserve Watch:
March 18 – Associated Press (Christopher Rugaber): “The Federal Reserve kept its key interest rate unchanged… and Chair Jerome Powell highlighted the increasingly uncertain outlook for the U.S. economy and inflation in the wake of the Iran war… Fed policymakers maintained their forecast for an additional rate cut this year, but… Powell suggested that the central bank remains concerned about inflation that was still stubbornly elevated even before the conflict’s impact on gas prices. ‘The thing I really want to emphasize is, nobody knows,’ Powell said, referring to the impact of the Iran war. ‘The economic effects could be bigger, they could be smaller, they could be much smaller, they could be much bigger. We just don’t know.’ Powell said the central bank would need to see further progress in the price of goods declining as the impact of tariffs fades before cutting rates further.”
March 18 – Reuters (Michael S. Derby): “Federal Reserve Chair Jerome Powell said… he’ll stick around as head of the U.S. central bank until his successor is confirmed, and will not leave the institution until a criminal investigation into the Fed is resolved. ‘If my successor is not confirmed by the end of my term as chair, I would serve as chair pro-tem’ until that’s resolved, Powell said… following the end of the Fed’s latest two-day policy meeting. He said that is what ‘the law calls for’ and ‘that’s what we’ve done on several occasions, including involving me, and that’s what we’re going to do in this situation’.”
U.S. Economic Bubble Watch:
March 19 – Associated Press (Matt Ott): “U.S. applications for unemployment benefits fell last week… The number of Americans filing for jobless aid for the week ending March 14 fell by 8,000 from the previous week to 205,000… That’s fewer than the 215,000 new filings analysts… were expecting… The total number of Americans filing for unemployment benefits for the previous week ending March 7 rose by 10,000 to 1.86 million…”
March 17 – Reuters (Lucia Mutikani): “Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates… The pending home sales index rebounded 1.8% last month to 72.1… Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to be limited by the war in the Middle East that is raising oil prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of Realtors said…”
March 16 – New York Times (Kailyn Rhone): “The average monthly new-car payment reached $774 in January, up from $588 in January 2021, according to Edmunds… A growing share of buyers are taking on even larger loans: More than 20% of new-car borrowers agreed to pay over $1,000 a month at the end of last year, which was a record… But loan payments are only part of the strain. When insurance, gas, repairs and maintenance are included, the total cost of owning a vehicle has risen more than 40% since January 2020, according to an index from Navy Federal Credit Union. All of this pressure has begun to weigh on many households.”
China Watch:
March 15 – Bloomberg: “China’s economy rebounded in early 2026 with a surprising uptick in domestic consumption and investment, an acceleration that may prove hard to sustain if the war in Iran stalls exports. Factories revved up production as shipments overseas surged at the start of this year. Industrial output climbed 6.3% in January-February from a year earlier… Retail sales rose 2.8% in the first two months — more than triple their gain in December — while fixed-asset investment unexpectedly expanded 1.8% after contracting for the first time on record in 2025.”
March 17 – Bloomberg (Mark Cudmore): “The PBOC is on track to surpass the ECB as the world’s largest central bank this month, as measured by respective balance sheets in dollar terms.”
March 15 – Bloomberg: “China’s home price declines moderated in February… New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.28% from January, when they slid 0.37%... Resale home values, which are subject to less government intervention, decreased 0.43%, the smallest decline in 10 months… Among 70 major cities tracked by the government, 10 saw new-home values climb from a month earlier, the most since last June. Most of them are top-tier cities and provincial hubs.”
Central Banker Watch:
March 19 – Bloomberg (Mark Schroers, Jana Randow, and Alexander Weber): “The European Central Bank is well placed to deal with growing dangers from the war in Iran after holding interest rates unchanged for a sixth meeting, President Christine Lagarde said. The deposit rate was left at 2% on Thursday — as predicted… The ECB warned that the conflict in the Middle East is resulting in faster inflation and slower economic expansion, saying it’s ‘determined’ to keep price gains stable around the 2% target. ‘We are both well positioned and well equipped to deal with the development of a major shock that is unfolding… We are going to continue doing what we have been doing’.”
March 18 – Financial Times (Leo Lewis): “The Bank of Japan has kept interest rates on hold, warning that the economy could be ‘dragged down’ by further increases in the price of oil and deteriorating terms of trade arising from the ongoing conflict in the Middle East. The central bank’s decision to leave the overnight call rate at around 0.75% was widely expected… But analysts said that the BoJ still managed to strike a hawkish tone, suggesting it planned to raise rates later this year.”
March 17 – CNBC (Lim Hui Jie): “Australia’s central bank… raised benchmark policy rates for a second straight time, pushing them to their highest since April 2025 at 4.1%, amid sticky inflation. The 25 bps hike was in line with expectations…, and comes as Australia’s inflation stays above the central bank’s upper limit of 3%, with the war in the Middle East risking a further rise in prices. ‘While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025,’ the Reserve Bank of Australia said…”
Europe Watch:
March 15 – Wall Street Journal (Tom Fairless and Kim Mackrae): “An energy shock from the war in the Middle East is set to deliver a punishing blow to Europe’s economy, in a bitter twist for a region that had been hoping to accelerate growth this year after a long stretch of stagnation that angered voters across the continent. Policymakers are scrambling to provide relief, but their options are more limited than during Russia’s invasion of Ukraine four years ago… Today, borrowing costs are surging across the continent, and government debt in the U.K. and France is at or near the highest share of GDP in at least six decades.”
Japan Watch:
March 19 – New York Times (River Akira Davis): “Gasoline prices in Japan reached a record high this week, presenting a challenge for the nation’s popular prime minister, Sanae Takaichi, who has campaigned on a platform of shielding Japanese households from the pain of rising prices. Japan is heavily dependent on the Middle East for its supply of crude oil… In Japan, the average retail price of gasoline climbed to 191 yen, or about $1.20, per liter on Monday… That marked an 18% increase from a week earlier.”
March 17 – CNBC (Lim Hui Jie): “Japan’s exports climbed 4.2% from a year earlier in February, marking a sharp slowdown after hitting an over-three-year high in January. However, the increase was higher than the 1.6% rise expected…, and against the 16.8% jump in the previous month. Exports to mainland China, Japan’s largest trading partner, fell 10.9%, while shipments to the U.S. dropped 8%. Tokyo’s exports to Washington may weaken further after the U.S. announced Section 301 investigations that could lead to the reimposition of tariffs.”
Social, Political, Environmental, Cybersecurity Instability Watch:
March 17 – Bloomberg (Akshat Rathi and Laura Millan): “Growing global adoption of electric vehicles helped avoid the consumption of 2.3 million barrels of oil per day last year, according to… BloombergNEF. Those fossil fuel savings are expected to increase every year for the rest of the decade as more drivers turn to battery-powered vehicles, said Claudio Lubis, BNEF’s oil analyst. The research group projects that by 2030, avoided daily consumption could more than double to 5.25 million barrels under the economic transition scenario, where governments deploy technologies that are economical rather than implement policies primarily driven by climate goals.”
Geopolitical Watch:
March 17 – Reuters (Lim Hui Jie): “More than 400 people were killed in a Pakistan air force strike on a drug rehabilitation centre in Kabul, the Afghan Taliban administration said…, in the deadliest incident since the two neighbours began fighting late last year. Pakistan rejected the statement as false and misleading, saying it had ‘precisely targeted military installations and terrorist support infrastructure’ on Monday night.”
The S&P500 fell 1.9% (down 5.0% y-t-d), and the Dow slumped 2.1% (down 5.2%). The Utilities sank 5.0% (up 4.4%). The Banks rallied 1.6% (down 9.0%), and the Broker/Dealers recovered 1.0% (down 5.9%). The Transports increased 0.7% (up 2.8%). The S&P 400 Midcaps declined 1.3% (down 0.3%), and the small cap Russell 2000 fell 1.7% (down 1.8%). The Nasdaq100 dropped 2.0% (down 5.4%). The Semiconductors added 0.3% (up 8.3%). The Biotechs declined 1.0% (down 7.3%). With bullion slumping $527, the HUI gold index sank 14.7% (down 2.6%).
Three-month Treasury bill rates ended the week at 3.617%. Two-year government yields surged 18 bps to 3.90% (up 43bps y-t-d). Five-year T-note yields rose 15 bps to 4.01% (up 28bps). Ten-year Treasury yields gained 10 bps to 4.38% (up 21bps). Long bond yields increased four bps to 4.94% (up 10bps). Benchmark Fannie Mae MBS yields surged 19 bps to 5.47% (up 43bps).
Italian 10-year yields surged another 18 bps to 3.96% (up 41bps y-t-d). Greek 10-year yields jumped 16 bps to 3.94% (up 50bps). Spain's 10-year yields gained eight bps to 3.58% (up 29bps). German bund yields increased six bps to 3.04% (up 19bps). French yields rose eight bps to 3.76% (up 19bps). The French to German 10-year bond spread widened about two to 72 bps. U.K. 10-year gilt yields surged 17 bps to 4.99% (up 52bps). U.K.’s FTSE equities index sank 3.3% (down 0.2% y-t-d).
Japan’s Nikkei 225 Equities Index declined 0.8% (up 6.0% y-t-d). Japan’s 10-year “JGB” yields added two bps to 2.28% (up 21bps y-t-d). France’s CAC40 dropped 3.1% (down 5.9%). The German DAX equities index sank 4.6% (down 8.6%). Spain’s IBEX 35 equities index fell 2.0% (down 3.4%). Italy’s FTSE MIB index slumped 3.3% (down 4.7%). EM equities were under pressure. Brazil’s Bovespa index declined 0.8% (up 9.4%), and Mexico’s Bolsa index dropped 2.4% (down 0.4%). South Korea’s Kospi rallied 5.4% (up 37.2%). India’s Sensex equities index was little changed (down 12.5%). China’s Shanghai Exchange Index slumped 3.4% (down 0.3%). Turkey’s Borsa Istanbul National 100 index slipped 0.3% (up 15.9%).
Federal Reserve Credit increased $11.5 billion last week to $6.603 TN, with a 14-week expansion of $113 billion. Fed Credit was down $2.287 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.876 TN, or 77%. Fed Credit inflated $3.792 TN, or 135%, since November 7, 2012 (697 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped $21.0 billion last week to $3.025 TN - the low back to January 2012. “Custody holdings” were down $279 billion y-o-y, or 8.4%.
Total money market fund assets (MMFA) expanded $38.7 billion to a record $7.886 TN - with a 35-week surge of $834 billion, or 17.5% annualized. MMFA were up $854 billion, or 12.2%, y-o-y - having ballooned a historic $3.272 TN, or 70.6%, since October 26, 2022.
Total Commercial Paper declined $14.7 billion to $1.395 TN. CP expanded $11 billion, or 1.0%, y-o-y.
Freddie Mac 30-year fixed mortgage rates jumped 11 bps to 6.22% (down 45bps y-o-y). Fifteen-year rates increased four bps to 5.54% (down 29bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate down four bps to 6.41% (down 41bps).
Currency Watch:
March 17 – Bloomberg: “Chinese companies are boosting hedges through foreign‑exchange derivatives, pushing outstanding forward contracts to record levels, as the yuan’s surge threatens to erode exporters’ overseas earnings. Net outstanding forward settlement contracts reached $107 billion at the end of February, the highest level since records began in 2010, according to… the State Administration of Foreign Exchange.”
For the week, the U.S. Dollar Index declined 0.7% to 99.647 (up 1.3% y-t-d). On the upside, the Norwegian krone increased 2.1%, the Swedish krona 1.5%, the euro 1.4%, the New Zealand dollar 1.0%, the British pound 0.8%, the Australian dollar 0.6%, the Swiss franc 0.4%, the Japanese yen 0.3%, the Mexican peso 0.3%, the Brazilian real 0.2%, and the Singapore dollar 0.1%. On the downside, the South African rand declined 0.6%, and the South Korean won slipped 0.4%. China's (offshore) renminbi was unchanged versus the dollar (up 1.22% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index slipped 0.6% (up 22.3% y-t-d). Spot Gold dropped 10.5% to $4,492 (up 4.0%). Silver sank 15.7% to $67.945 (down 5.2%). WTI Crude slipped 48 cents, or 0.5%, to $98.23 (up 71%). Gasoline jumped another 8.0% (up 92%), while Natural Gas declined 1.1% to $3.095 (down 16%). Copper lost 6.6% (down 5%). Wheat dropped 3.8% (up 17%), while Corn rose 2.9% (up 6%). Bitcoin was little changed at $70,539 (down 19.5%).
Market Instability Watch:
March 16 – Reuters (Pritam Biswas and Arasu Kannagi Basil): “Private-credit market jitters have spilled onto Wall Street, with some major U.S. banks tightening lending while the funds have capped withdrawals as mounting concerns prompt firms to curb risk and brace for further strain. Sentiment had been dented by concerns over valuations and transparency, as well as cases such as the bankruptcy of auto-parts supplier First Brands and car dealership Tricolor, where some private-credit lenders held exposure. U.S. banks had almost $300 billion in loans outstanding to private-credit providers as of June 2025, and a further $285 billion lent to private-equity funds, along with $340 billion in unused lending commitments to those borrowers, according to… Moody’s.”
March 19 – Bloomberg (Alyce Andres): “US bond traders are no longer pricing in rate cuts in 2026 and that’s forcing an unwind of the popular steepener trade. The move got its impetus after the Bank of England said it would be ready to act against inflation — sending 2-year yields in the UK up more than 35 bps. That’s spilling into the US, where yields on 2s rose as much as 18 bps before retreating somewhat. That narrowed the benchmark spread between 2s10s to ~36.5 bps, the tightest since last April…”
March 19 – Bloomberg (John McCrank): “JPMorgan… credit analysts project US high-yield bond funds to post the biggest net outflows since the tariff-related market turmoil in April, as credit spreads widened amid the conflict in Iran and over its fallout. The bank estimates a $3.7 billion outflow for US junk funds for the week ended March 18, based on daily fund flows, which, if met, would be the largest since the week of April 9. The outflow would also extend the streak of withdrawals to six consecutive weeks, matching the streak through Jan. 15, 2025.”
March 16 – Bloomberg (Jack Ryan): “The worst silver sell-off in history at the end of January was accelerated by the growing footprint of retail investors in leveraged exchange-traded funds, according to the Bank for International Settlements. The white metal collapsed as much as 36% on Jan. 30, its biggest one-day wipeout on record. The abrupt plunge, following a rapid surge of more than 50% in just a few weeks, points to the destabilizing role of retail flows that were amplified by forced sales from leveraged ETFs, the… institution said in its quarterly report…”
March 16 – Financial Times (Martin Arnold): “A lengthy conflict in the Middle East would threaten to cause a further surge in interest rates and a sell-off in financial markets that could magnify the wider damage to the global economy, the Bank for International Settlements has warned. A war that lasts longer or widens more than expected risks putting pressure on asset prices and undermining governments’ fiscal positions, according to… the BIS… ‘If the conflict is prolonged, financial amplifications could magnify the macroeconomic impacts,’ said Hyun Song Shin, head of the bank’s economics and monetary department… ‘A spike in interest rates could put pressure on rich asset price valuations,’ he said. ‘Rising financing costs for governments and the need to issue more debt could undermine fiscal sustainability given already strained public finances in many countries’.”
March 17 – Bloomberg (Edward Clark): “The outbreak of hostilities in the Middle East and surging energy costs are expected to exacerbate soaring levels of financial distress among European corporates, according to Alvarez & Marsal Inc. Even before the US and Israel began their attacks on Iran on Feb. 28, financial strain among the continent’s businesses was at a four-year high, a new report from the consultancy… said.”
March 17 – Financial Times (Rachel Rees and Emily Herbert): “Investors have piled into cash at the fastest rate since the Covid pandemic, as the war in Iran and worries over private credit puncture a previously bullish mood in markets. Average cash holdings in portfolios rose to 4.3% of assets under management in March, up from 3.4% in February and the biggest monthly jump since March 2020, according to a… survey of fund managers by Bank of America. The figures mark a sharp reversal since January, when cash levels were at a record low of 3.2%...”
U.S. Credit Trouble Watch:
March 16 – New York Times (Richard Bookstaber): “At the start of the 2008 financial crisis, I was at a hedge fund. By its end, I was at the U.S. Treasury. At both, I worked with people only a few years out of college. The drama of 2008 was all they knew about financial markets. ‘Remember what’s happening,’ I told them. ‘You’ll never see anything like this again.’ Now I’m not so sure. Maybe they’ll see worse. We have returned to a period of risk, one rife with the sort of pressures that have led to major financial crises. This time, the risks are spread across industries, markets and nations: artificial intelligence, the roughly $2 trillion private credit industry, stock markets, Taiwan and now Iran. These risks are analyzed one by one, news article by news article. We understand them in isolation. Yet they are different entry points into the same underlying structure — a complex and tightly coupled system where the specific source of stress matters less than how quickly that stress can spread. Signs of systemic strain are emerging.”
March 16 – Wall Street Journal (Jonathan Wei): “Imagine opening a black box, only to find 5,000 more black boxes inside. Investors are fleeing the $42 billion Cliffwater Corporate Lending Fund, among the latest of its kind to limit redemptions for shareholders. Many investors appear to believe the private-credit fund’s official net asset value is inflated, prompting them to sell their shares, or try to. One reason many are rushing for the exits: It can be difficult for shareholders to understand what they own. The disclosures at funds like this often are as impenetrable as they are voluminous. The Cliffwater fund’s most recent quarterly report listed more than 3,600 individual holdings, including direct loans to middle-market corporate borrowers and ownership stakes in other private-credit funds. Most of the names aren’t recognizable, such as Accordion Partners, ALKU Intermediate Holdings or ZB Holdco. The fund also listed about 1,700 unfunded loan commitments to almost 1,000 different borrowers totaling $6.9 billion, which is money the fund would have to supply on demand.”
March 17 – Bloomberg (Rene Ismail and Emily Graffeo): “Default rates in direct lending will climb to 8% as advances in artificial intelligence continually disrupt the software industry, according to Morgan Stanley. While AI disruption has yet to impact private credit fundamentals in a ‘material way,’ elevated leverage and looming maturity walls within the software sector may push default rates near peak levels unseen since the pandemic, a team of analysts including Joyce Jiang said... ‘Credit fundamentals of software loans are challenged with the highest leverage and the lowest coverage ratios across major sectors,’ the strategists wrote. While defaults have moderated across public and private loan markets, they added, defaults are only set to climb further as AI disruption unfolds.”
March 16 – Financial Times (Amelia Pollard): “The private capital industry’s problems are far worse than Wall Street has acknowledged, as traditional metrics obscure weaknesses in the leveraged buyout market, according to a top credit hedge fund. A ‘substantial portion’ of the private equity industry is already ‘stressed or distressed’, said Tony Yoseloff, managing partner and chief investment officer at credit hedge fund Davidson Kempner Capital Management. ‘You’re not looking at a problem five years from now, you’re looking at a problem that exists today.’ In new research…, the hedge fund, which manages more than $38bn of assets, gives a broad diagnosis of growing risks in the private capital industry, and why it soon expects buyouts from the last decade to crack. The hedge fund argues excessive leverage, weak cash flows and loose debt contracts have converged to create a ripe environment for corporate defaults.”
March 18 – Financial Times (Toby Nangle): “Alphaville encounters all sorts of estimates from credentialised organisations as to the size of private credit fund borrowings, the integrity of which we don’t doubt. But answers vary. So it’s good to see the OFR do thorough work, and appreciate them describing their approach and data sources in depth. Their answer to the question ‘how much lending exposures do banks and nonbanks have to private credit funds’ is somewhere between $410bn and $540bn. Of this, $195bn is to business development companies… And somewhere between $215-345bn is accounted for by bank and nonbank lending… The range is so wide because while reported borrowings totalled $215bn at year-end 2024, the OFR’s analysis found the gap between gross and net asset values implied borrowing of $345bn.”
March 18 – Bloomberg (Rene Ismail): “S&P Global Ratings lowered its outlook on Cliffwater LLC’s flagship private credit fund to negative from stable, citing elevated redemption requests that risk putting pressure on its liquidity. The roughly $32 billion Cliffwater Corporate Lending Fund’s decision to meet 7% of withdrawal requests in the first quarter was higher than the 5% minimum, and the second quarter in a row it topped that level, S&P said… Analysts warned if that ‘were to constitute the new norm and not the exception,’ it could strain the fund and potentially spur a downgrade. ‘We view the 5% redemption cap as an important guardrail for liquidity,’ the S&P analysts wrote… ‘Raising the redemption cap to 7% per quarter would weaken our opinion of the fund’s liquidity’.”
March 16 – Wall Street Journal (Ben Glickman): “One lending blowup is showing how America’s banks helped fuel the private-credit boom, and what could happen in its unraveling. Traditional lenders… have touted their efforts to get a slice of Wall Street’s newest action. But the details of the exposure are murky, and investors have grown skittish about banks’ connections to private credit this year. A dispute between Southwest bank Western Alliance and investment bank Jefferies Financial Group that spilled into the open this month gives fresh clues to how banks are tied to the type of nonbank lending known as private credit and how messy it might be if trouble gets worse. Western Alliance sued for breach of contract and alleged a Jefferies subsidiary didn’t pay back part of a loan connected to now-bankrupt auto-parts supplier First Brands… ‘The concerns are because it’s such a black box,’ said Bobby Reddy, a professor of corporate law and governance at the University of Cambridge. At the heart of the Western Alliance and Jefferies fight is a common setup. Western Alliance had a loan to an entity Jefferies created to fund First Brands known as a special-purpose vehicle, or SPV.”
March 18 – Wall Street Journal (Peter Rudegeair): “A fund holding consumer and small-business loans made by companies including Affirm and Block is the latest corner of the private-credit market to come under stress. Stone Ridge Asset Management told clients in the fund last week that recent redemption requests were so high that it would honor only 11% of the amount investors wanted back... That suggests that investors’ concerns about private credit are broadening. Unlike other private-credit funds that experienced a flight of investors in recent weeks, Stone Ridge’s fund didn’t hold loans to software makers or other corporate sectors that investors fear will be displaced by… artificial intelligence. The Stone Ridge Alternative Lending Risk Premium Fund buys whole loans and securities backed by loans made by fintech lenders. That includes buy-now-pay-later loans from Affirm, personal loans from LendingClub and Upstart and loans that payments companies like Block and Stripe offer to merchants using their platforms.”
March 17 – Bloomberg (Scott Carpenter): “Investors are demanding higher risk premiums to own the debt of business development companies, reflecting their anxiety around private credit exposure, according to Barclays Plc. A broad-based index of the debt shows spreads climbing 80 bps to 260 bps this year, reaching ‘rarefied territory,’ strategists including Corry Short wrote... Unsecured bonds of BDCs have also ‘meaningfully’ underperformed collateralized loan obligations — an asset class that offers the best point of comparison… ‘CLOs are reasonable comps for BDCs because both own corporate loan assets financed with debt and equity obtained through the capital markets,’ the strategists wrote. ‘Our view, therefore, is the pricing of those instruments should resemble each other.’ But since January, spreads on broadly syndicated loan CLOs have widened about 20 bps, compared to nearly 75 bps for unsecured BDC debt.”
March 17 – Bloomberg (Davide Scigliuzzo): “The $1.8 trillion private credit industry may need years to work through an ‘intense yet warranted reset’ that has caused a wave of redemptions from some of the market’s biggest funds, according to Sixth Street Partners. ‘While some may believe today’s volatility is only a minor episode to be weathered, we believe there is going to be an honest reckoning for the sector resulting in a healthier and more resilient direct lending industry,’ Sixth Street Specialty Lending, one of the firm’s funds, wrote in a letter to investors…”
March 15 – Financial Times (Antoine Gara and Eric Platt): “Wealthy individuals have sought to pull more than $10bn from some of the largest private credit funds in the first quarter, prompting investment managers to limit withdrawals and threatening to stall one of Wall Street’s most important sources of growth. Debt funds managed by powerhouse firms including Blackstone, BlackRock, Cliffwater, Morgan Stanley and Monroe Capital have agreed to honour about 70% of the $10.1bn of redemption requests they have faced… That number is expected to rise over the next two weeks, as funds managed by Ares Management, Apollo Global, Blue Owl, Oaktree and Goldman Sachs tally up how many of their investors are heading for the exits.”
March 18 – Bloomberg (Nabila Ahmed): “Pacific Investment Management Co. is staying away from loans being put up for sale amid the tumult in the $1.8 trillion private credit market because they’re ‘pretty bad,’ according to its president Christian Stracke. As some funds look to offload assets to meet investor demand for redemptions, the prices being asked for the assets are still too high given the risk, Stracke said… ‘A lot of the loans that are out for sale right now are pretty bad loans,’ Stracke said. ‘We’ve seen some blocks of those. They’re not clearing at a price yet where we would be interested in buying them’.”
March 17 – Financial Times (Michelle Chan and Eric Platt): “JPMorgan… and Wall Street banks suspended more than $5bn of debt sales for customer service software group Qualtrics amid investor scepticism over whether its business model can withstand AI disruption. The decision to pause the financing is a setback for Silver Lake and the Canada Pension Plan Investment Board, which bought Qualtrics for $12.5bn in 2023, and for JPMorgan and a group of Wall Street banks that had agreed to fund its latest deal. Investors will be scrutinising whether JPMorgan can launch the $5.3bn transaction before Qualtrics needs to wire cash to close its $6.75bn acquisition of… Press Ganey Forsta. If it does not, the bank and nearly a dozen other lenders who had agreed to provide so-called bridge financing will be forced to come up with the capital themselves, known in industry parlance as a ‘hung deal’.”
Global Credit Watch:
March 18 – Financial Times (Emma Dunkley, Simon Foy and Lee Harris): “Bank of America has withdrawn a recommendation that clients bet against European companies potentially exposed to ‘private credit shocks’, saying that it made ‘factual inaccuracies’. The US bank sent a note to customers… warning that the recent sales commentary it had circulated, in which it advised clients to bet against a basket of stocks including Deutsche Bank and Partners Group, had been pulled ‘based on a review of new information’ and because of factual errors. The bank added: ‘Those views do not reflect those of BofA Research or the broader organisation. We apologise to the companies that were inaccurately referenced.’ The reversal comes just hours after the FT revealed that BofA pitched clients the idea that European stocks exposed to private credit had 30% ‘downside risk’ compared with US rivals…”
Iran War Watch:
March 19 – Reuters (Rami Ayyub and Humeyra Pamuk): “Israel’s attack on an Iranian gas field on Wednesday was coordinated with the United States but is not likely to be repeated, three Israeli officials said, despite President Donald Trump saying he did not know about it in advance. The attack on Iran’s South Pars gas field drew an Iranian aerial assault on energy infrastructure in Qatar and across the Middle East, marking the biggest escalation in the U.S.-Israeli war on Iran. On Wednesday night, Trump said in a social media post that Washington ‘knew nothing about this particular attack’ and that Israel would not attack the gas field further unless Iran again attacked Qatar.”
March 17 – Financial Times (Malcolm Moore and Rachel Millard): “Iran is capable of sharply escalating its campaign against energy infrastructure in the Gulf, analysts have warned, after Tehran carried out its first successful strike on an operational oil and gasfield. ‘The gloves haven’t come off yet when it comes to striking energy infrastructure,’ said Richard Bronze, head of geopolitics at consultancy Energy Aspects. ‘The Iranians are now hitting a growing list of targets across the Gulf states and that strategy may have further steps to come.’ Iran on Monday successfully struck the Shah oil and gasfield in southern Abu Dhabi.”
March 19 – Reuters (Maha El Dahan, Andrew Mills and Yousef Saba): “Iranian attacks have knocked out 17% of Qatar’s liquefied natural gas (LNG) export capacity, causing an estimated $20 billion in lost annual revenue and threatening supplies to Europe and Asia, QatarEnergy's CEO and state minister for energy affairs told Reuters... Saad al-Kaabi said two of Qatar’s 14 LNG trains and one of its two gas-to-liquids (GTL) facilities were damaged in the unprecedented strikes. The repairs will sideline 12.8 million tons per year of LNG for three to five years, he said… ‘I never in my wildest dreams would have thought that Qatar would be - Qatar and the region - in such an attack, especially from a brotherly Muslim country in the month of Ramadan, attacking us in this way,’ Kaabi said.”
March 19 – Wall Street Journal (Summer Said, Rebecca Feng and Alexander Ward): “Escalating attacks on Persian Gulf oil-and-gas infrastructure are sending the U.S.-Israeli war with Iran into a dangerous new phase that threatens to worsen the crisis over global energy supplies. Israel struck at the crown jewel of Iran’s energy industry on Wednesday—the giant South Pars gas field that Iran shares with Qatar and is by far the largest in the world. Iran retaliated with two attacks on a major gas hub in Qatar just across the Gulf and a missile barrage fired at the Saudi capital, Riyadh… Israel and Iran had already hit energy facilities throughout the nearly three-week-old war, but Wednesday’s attacks struck some of the world’s most important hubs and raised the prospect of tit-for-tat volleys against oil-and-gas facilities.”
March 19 – Financial Times (Malcolm Moore, Rachel Millard and Verity Ratcliffe): “As emergency workers sifted through the smouldering wreckage at Qatar’s Ras Laffan complex…, traders in Europe and Asia were waking up to a fresh energy crisis. In normal times, a fifth of the world’s supply of liquefied natural gas (LNG) flows from Ras Laffan, a vast industrial site almost three times the size of Paris built over three decades at a cost of hundreds of billions of dollars. LNG terminals are some of the biggest and most complex constructions in human history, and Ras Laffan is the largest of them all, turning Qatar’s huge gas reserves into a super-chilled fuel that can be shipped around the world. At least before the Iranian missiles arrived. ‘I woke up this morning and thought, ‘No, please no,’’ said Anne-Sophie Corbeau, a former head of gas analysis at BP who is now at Columbia University’s Center on Global Energy Policy. ‘This has always been my nightmare scenario, my Armageddon scenario, the one I didn’t want to happen’.”
March 16 – Wall Street Journal (Anat Peledv and Omar Abdel-Baqui): “Israel’s ground invasion of Lebanon opens a new front in a widening Middle East war, expanding its campaign against Iran by moving against one of its most powerful regional allies, Hezbollah, and stretching its military across an unprecedented number of conflict zones. Israel said on Monday that it launched a ground operation in a southern swath of Lebanon and was prepared for a prolonged campaign. Israel’s defense minister said Lebanese residents will be unable to return to the area until Israel determines it has removed the threat posed by Hezbollah… The defense minister, Israel Katz, said the operation would be similar to the Israeli campaign in Gaza…”
March 17 – Wall Street Journal (Alistair MacDonald): “Last week as Iran laid mines in the Persian Gulf, four of the U.S. Navy’s few specialist minesweepers were on the move—to Philadelphia and their eventual decommissioning. The Navy hasn’t had a significant mine clearing capability in decades, former naval officers and analysts said. Now it faces having to deal with the risk of mines in one of the world’s most important waterways while the West’s thinking on how to deal with the seaborne threat is in flux… ‘The U.S. Navy has neglected minesweeping, and our limited number of hulls will make it difficult to credibly escort oil tankers in a contested environment,’ said Eliot Cohen, a scholar at the Center for Strategic and International Studies think tank.”
March 16 – Financial Times (Charles Clover): “The US Navy has said that two of its three Gulf-based warships with mine-clearing capabilities have travelled 4,000 miles to Malaysia for a ‘logistical stop’. The decision to move the ships comes as Iran’s ability to lay sea mines in the Strait of Hormuz has raised fears that Tehran could block the strategic waterway through which 20% of the world’s oil exports pass.”
March 17 – Bloomberg (Tony Capaccio and Courtney McBride): “The USS Gerald R. Ford aircraft carrier is leaving the fight with Iran and heading back to port, a US official familiar… said, after a fire broke out in its laundry area and left at least two sailors with non-life-threatening injuries. The Ford will travel from its current location in the Red Sea to Souda Bay, on the Greek island of Crete… The ship had stopped in Souda Bay in late February on its way to the Red Sea.”
March 14 – Politico (María Paula Mijares Torres): “The US Embassy in Baghdad told Americans… to leave Iraq immediately following a series of attacks targeting US nationals. ‘US citizens should leave Iraq now,’ the Embassy said... ‘US citizens choosing to remain in Iraq are strongly encouraged to reconsider in light of the significant threat posed by Iran-aligned terrorist militia groups’.”
Iran War Ramifications Watch:
March 19 – Axios (Dave Lawler): “Defense Secretary Pete Hegseth confirmed the Pentagon would ask Congress for more money to wage war in Iran, though he said the reported $200 billion figure ‘could move.’ A request on that scale would likely face stiff opposition from many Democrats and some Republicans, given the unpopularity of the war and the fact that it would be in addition to the Pentagon's existing $1 trillion budget… Hegseth confirmed the Pentagon was seeking more money to accelerate production of weapons systems the U.S. and Israel have expended during the war, and ensure adequate stockpiles in future… ‘As far as $200 billion I think that number could move,’ Hegseth said… ‘Obviously it takes money to kill bad guys, so we’re going back to Congress and our folks there to ensure that we’re properly funded for what's been done, for what we may have to do in the future, ensure that our ammunition is refilled, and not just refilled, but above and beyond’.”
March 16 – Axios (Emily Peck): “Countries across South Asia are imposing emergency measures like rationing energy, closing universities, cutting short workweeks and even changing the way crematoriums work to deal with the fallout from the Iran war. Yes, the war is raising gas prices for Americans and causing a political headache for President Donald Trump — but it’s also creating a deeper crisis abroad that governments and businesses are scrambling to manage. It’s the latest global economic shock in a turbulent decade. The 2020s have seen a pandemic, Russia’s invasion of Ukraine and the resulting inflation, and, more recently, Trump’s ‘Liberation Day’ tariffs, which rocked markets and panicked some countries. The laws of supply and demand make the math fairly straightforward here: 20% of the world’s oil and other energy products go through the Strait of Hormuz, and Iran has effectively shuttered traffic.”
March 18 – Financial Times (Alice Hancock): “The Middle East war has turned container shipping into a ‘wild west’, with carriers adding thousands of dollars in charges and dumping containers at far-flung ports… The effective closure of the Strait of Hormuz following Iranian strikes and fears of Houthi attacks in the Red Sea have prompted shipping lines to suspend bookings and reroute goods. Fire after strikes on Sunday over Dubai’s main port, Jebel Ali, has triggered further cancellations and congestion. The largest shipping groups, including MSC, Maersk, CMA CGM and Hapag-Lloyd, have told customers they reserve the right to invoke a 19th-century rule to allow them to leave containers at the nearest available port at their client’s expense. Charges for shipping containers, meanwhile, have risen as much as fourfold on certain routes thanks to war-risk insurance costs and fuel surcharges.”
March 18 – Politico (Ben Munster and Frederike Holewik): “Anxiety is growing over Europe’s unusually low gas storage levels as the war in Iran threatens to spark a fight among countries over dwindling global energy supply. The EU requires member countries to maintain gas reserves at 90% of capacity by the winter — a measure brought in after Russia’s 2022 invasion of Ukraine. But this year’s colder-than-average winter depleted those reserves to under 30% as of March, the lowest since 2022.”
March 18 – Associated Press (Jack Dura): “Tennessee farmer Todd Littleton expects to pay $100,000 more for fertilizer this season, a 40% spike from his bill last year thanks to the war in Iran — and he is scrambling to cover that extra cost. ‘The problem is, is we’re so strained financially coming into this issue,’ said Littleton, a third-generation farmer from Gibson County... ‘We have had a couple of record losses the last couple years, so everyone’s kind of grabbing at straws anyway, and then to have input prices increase yet again, it just really couldn’t happen at a worse time’.”
March 13 – Financial Times (Susannah Savage): “The Middle East war is close to triggering a global food shock worse than that unleashed by Russia’s 2022 full-scale invasion of Ukraine, experts have said, as fertiliser shortages threaten food production on multiple continents. Iranian attacks have knocked out swaths of Middle Eastern production of urea, the world’s most widely used nitrogen fertiliser, while gas shortages have forced fertiliser producers across south Asia to cut output. That means that of the 2.1mn tonnes of urea — the world’s most widely used nitrogen fertiliser — that would normally have been loaded for export over the past two weeks, about half has been disrupted. At the same time, more than 1.1mn tonnes of fertiliser and fertiliser inputs, including 570,000 tonnes of urea, is currently stuck in the Gulf, either being loaded or already on ships…”
March 16 – Bloomberg: “China is tightening its curbs on fertilizer exports as the war in Iran disrupts trade of key crop nutrients, driving up prices globally. The government has asked exporters to halt outbound shipments of nitrogen-potassium fertilizer blends, people familiar… said. Beijing also reiterated existing export restrictions on urea, quashing traders’ hopes that new sales quota would be issued soon, they said. The moves are part of an effort to secure domestic supplies and stabilize prices as farmers in the agricultural powerhouse gear up for spring planting and demand peaks.”
March 17 – Reuters (Rozanna Latiff): “Semiconductor firms in Malaysia are monitoring risks from disruptions to helium supplies due to the conflict in the Middle East, though the situation has not caused any operational interruptions so far, an industry executive told Reuters. Helium prices have risen sharply due to the disruption of natural gas processing in Qatar by the U.S.-Israel war against Iran. Helium - critical for industries such as semiconductors and medical imaging - is a byproduct of LNG processing, and any slowdown in output is expected to affect global supplies.”
March 16 – Bloomberg (Mirette Magdy): “The Iran war threatens to deal significant blows to the Gulf’s biggest economies, including Saudi Arabia, the United Arab Emirates and Qatar, if it doesn’t end soon. Qatar and Kuwait could each see their gross domestic product contract by 14% this year should the conflict continue through to the end of April, which would mean a two-month effective halt in oil and natural flows through the Strait of Hormuz, according to Goldman Sachs… That’d be the worst economic slump for those two countries since the early 1990s, when Iraq’s invasion of Kuwait triggered the Gulf War.”
March 19 – AFP: “Russia… blamed Israel for what it called a ‘targeted’ airstrike that wounded a TV crew from state-run RT in Lebanon amid ongoing Israeli strikes and ground operations in the country’s south. The Ruptly video agency, a subsidiary of RT, posted footage showing an explosion and plumes of smoke rising through the air metres behind RT’s reporter, who was wearing a bulletproof vest with a ‘Press’ sign on it as he delivered an on-air report.”
Trump Administration Watch:
March 16 – Axios (Jim VandeHei and Mike Allen): “For five years in office, President Trump has operated with intuition, impulse and improvisation. The Iran war, now entering Week 3, is the first time Trump’s style has made it impossible for him to easily talk or improvise his way out. Trump could wind up trapped between his caprice and the realities of war. He expects a quick, clear victory. But unlike tariffs that can be swiftly imposed and rescinded, the war’s outcome is beyond unilateral control and quick fixes. And Iran gets a say. Trump is working to help break the Persian Gulf oil jam. But in doing so, he risks getting caught in an ‘escalation trap,’ where a stronger force is incentivized to keep attacking to demonstrate dominance amid diminishing returns. A senior Trump administration official practically admitted as much, telling Axios’ Marc Caputo: ‘The Iranians f*cking around with the Strait makes [Trump] more dug in’.”
March 17 – Politico (Megan Messerly): “When the U.S. started firing Tomahawk missiles at Iran late last month, many of President Donald Trump’s allies hoped it would be a quick, surgical operation, similar to last year’s strike against Iran’s nuclear facilities or the ouster of Venezuelan dictator Nicolás Maduro in January. Though uneasy, they were reassured by the belief that Trump’s open-ended objectives gave him the flexibility to declare victory whenever he saw fit. Now, more than two weeks into the campaign, some of those allies believe the president no longer controls how, or when, the war ends. They fear Iran’s attacks on oil tankers in the Strait of Hormuz… are boxing Trump into a situation where escalating the conflict — potentially even putting American boots on the ground — becomes the only way to credibly claim victory. ‘We clearly just kicked [Iran’s] ass in the field, but, to a large extent, they hold the cards now,’ said one person close to the White House… ‘They decide how long we’re involved — and they decide if we put boots on the ground. And it doesn’t seem to me that there’s a way around that, if we want to save face’.”
March 17 – Financial Times (Edward Luce): “Wars, AI drama, even the odd peace prize — the world had plenty on its bingo card for 2026. But it did not include Donald Trump urging China to send ships to the Middle East. The US president’s request for Chinese help is a black swan moment. In an age of great power rivalry, the hegemon is inviting its main challenger to help extract it from the world’s most combustible region. Read that again. Then ponder where China’s incentive lies. Why interrupt your enemy while he is making a mistake? That China has no intention of sending minesweepers to the Strait of Hormuz is clear. The question is whether Xi Jinping wants to see Trump backed into a corner. It is one thing for China to gain a diplomatic edge over the US; quite another to test whether Trump is Dr Strangelove… The worse things go for Trump in the Gulf, the more tempted he will be to take risks. George W Bush’s 2003 invasion of Iraq ended up being a geopolitical windfall for China. American boots on the ground in Iran could be at least as big.”
March 17 - Associated Press (Aamer Madhani, Darlene Superville and Michelle L. Price): “President Donald Trump said Tuesday NATO and most other allies have rejected his calls to help secure the Strait of Hormuz, grousing that he has been unable to rally support behind his war of choice in Iran that he insists he’s conducting for the good of the world, even if it doesn’t appreciate his effort. Trump, who has been pressing allies to help safeguard the critical waterway to ease a chokepoint on the region’s oil exports, fumed that the U.S. is not getting support ‘despite the fact that we helped’ NATO ‘so much,’ and said that it was in allies’ interest to prevent Iran from securing a nuclear weapon. Trump’s indignant response to allies’ refusal to get involved in the war underscored that the conflict… is one the international community is looking to the U.S. leader to sort out himself after he launched it without consultation.”
March 16 – Financial Times (Lauren Fedor and Demetri Sevastopulo): “Donald Trump has asked Beijing to postpone his upcoming meeting with Xi Jinping in China, casting doubt on the long-awaited summit between the US president and his Chinese counterpart. Trump told reporters… that he wanted to delay the summit by a month as he grapples with the war in Iran. He had been scheduled to leave for Beijing in just over two weeks. ‘I’d love to but because of the war, I want to be here,’ Trump said, adding the White House had requested Beijing ‘delay’ the visit by ‘a month or so’. ‘It’s very simple. I have got a war going on,’ he added.”
March 16 – Reuters (Daniel Trotta): “U.S. President Donald Trump escalated his rhetoric against Cuba…, saying he expected to have the ‘honor’ of ‘taking Cuba in some form’ and that ‘I can do anything I want’ with the neighboring country. The threatening statements come even as Cuba and the United States have opened talks aimed at improving their largely adverse relations, which have reached one of their most contentious moments in the 67 years since Fidel Castro overthrew what had been a close U.S. ally. ‘I do believe I’ll be… having the honor of taking Cuba. That’s a big honor. Taking Cuba in some form,’ Trump told reporters… ‘I mean, whether I free it, take it. Think I can do anything I want with it. You want to know the truth,’ Trump told reporters…”
March 18 – Bloomberg (Felice Maranz and Scott Carpenter): “Shares of Fannie Mae and Freddie Mac, down about 70% in the last six months, hit their lowest level in more than a year as investors cast doubt on the Trump administration’s efforts to sell more stock in the mortgage-finance giants to the public. The shares have been on a steep decline since mid-September, shortly after optimism peaked that a public offering for the agencies could come in 2025. That didn’t happen.”
March 19 – Bloomberg (Scott Carpenter): “GSE purchases are keeping mortgage spreads contained during the recent jump in interest rates, according to Brean Capital. ‘Without their activity, nominal spreads would most likely be in the 140s and primary rates in the 6.5% area,’ head of fixed income strategy Scott Buchta wrote... Brean estimates that spreads are above 25bps lower than otherwise because of GSE purchases.”
March 17 – Axios (Dave Lawler and Marc Caputo): “Joe Kent, who led the National Counterterrorism Center and was a top aide to intelligence director Tulsi Gabbard, became the first senior Trump administration official to resign over the war in Iran. Kent’s stinging rebuke — that Trump launched the war under pressure from Israel despite Iran posing ‘no imminent threat’ to the U.S. — underscores the discomfort some in the ‘America First’ camp feel about the war… What he’s saying: ‘I cannot in good conscience support the ongoing war in Iran. Iran posed no imminent threat to our nation, and it is clear that we started this war due to pressure from Israel and its powerful American lobby’.”
March 16 – Bloomberg (Enda Curran): “Court papers released last week related to US Attorney Jeanine Pirro’s investigation of the Federal Reserve show Chair Jerome Powell feels compelled to stay on the central bank’s Board of Governors, at least until the legal process is completed. The signal, based on comments by lawyers on both sides of the case, is the first public hint that Powell may utilize his option to stay at the central bank even after his term as chair expires in May. His term as a Fed Governor runs until January 2028. In a legal filing, the Fed’s lawyers said that Powell’s own attorney ‘made clear that, to defend the Federal Reserve’s independence, Chair Powell could not resign while the criminal investigation is pending’.”
March 19 – Bloomberg (Maria Eloisa Capurro): “Treasury Secretary Scott Bessent said Federal Reserve Chair Jerome Powell’s decision to potentially stay on at the US central bank after his term as chair expires in May would go against historic norms. ‘Only one former chair has stayed on as a governor and the president of the United States asked him to stay,’ Bessent said… Powell told reporters he had ‘no intention’ of resigning as a member of the Fed’s Board of Governors until an investigation by the Department of Justice into a building renovation project is ‘well and truly over.’ Powell’s term as Fed chair ends in May, but his term as governor extends until January 2028.”
March 19 – Bloomberg (Saleha Mohsin, Chris Strohm, Josh Wingrove and Joshua Green): “Top leaders at the Justice Department are rallying behind a US attorney’s efforts to investigate Federal Reserve Chair Jerome Powell and the White House isn’t opposing it, amping up the high-stakes clash with major implications for who will lead the central bank. President Donald Trump had been open to the idea of dropping the probe into Powell until last Friday, when a judge rejected subpoenas issued to the central bank, according to people familiar... But Trump, angered by the ruling and harboring a longstanding belief that the courts are stacked against him, is now believed by aides and allies to support a push to appeal…”
Constitution Watch:
March 17 – Associated Press (David Bauder): “Through lectures, scoldings and outright threats, President Donald Trump and his aides are ratcheting up the pressure on journalists to cover the war in the Middle East the way the administration wants. The Republican president has fumed on social media about stories he doesn’t like and berated a reporter on Air Force One. The government’s top media regulator has warned that broadcasters risk losing their licenses if they don’t stay away from ‘fake news.’ Trump and his defense secretary, Pete Hegseth, have questioned the patriotism of news outlets because of their reporting. Trump has complained about war coverage in both specific and general ways… He attacked ‘Corrupt Media Outlets’ for falling for AI-generated false reports created by Iran and said the media ‘hates to report’ how well the U.S. military has performed.”
March 16 – New York Times (Michael M. Grynbaum): “The Trump administration has unleashed a multifaceted pressure campaign against news organizations as it increasingly bristles at media coverage of a Middle East military operation that many Americans oppose. Official Pentagon briefings now include attacks on outlets like CNN, with Defense Secretary Pete Hegseth nit-picking headlines. President Trump is turning to his bully pulpit on Truth Social to accuse ‘Highly Unpatriotic ‘News’ Organizations’ of airing ‘LIES’ about the war and musing about ‘Charges for TREASON.’ The goal seems to be pressuring journalists to back off critical coverage of the war effort… And the effort has gone well beyond words. Mr. Trump’s top media regulator, Brendan Carr of the Federal Communications Commission, issued an explicit warning to broadcast television networks…, a threat that Mr. Trump said he was ‘so thrilled to see’.”
March 15 – Bloomberg (María Paula Mijares Torres): “President Donald Trump said he’s ‘thrilled’ the Federal Communications Commission Chairman Brendan Carr warned broadcasters to ‘course correct’ on news coverage or risk losing their licenses, slamming media outlets for their portrayal of the Iran war. ‘I am so thrilled to see Brendan Carr, the Chairman of the Federal Communications Commission (FCC), looking at the licenses of some of these Corrupt and Highly Unpatriotic ‘News’ Organizations, Trump wrote…, accusing media outlets of misrepresenting the latest developments of the war and spreading what he called Iranian disinformation.”
March 15 – Bloomberg (María Paula Mijares Torres): “Federal Communications Commission Chairman Brendan Carr threatened broadcasters with cancellation of their licenses if they did not ‘correct course’ on news coverage. ‘Broadcasters that are running hoaxes and news distortions — also known as the fake news — have a chance now to correct course before their license renewals come up,’ Carr said... ‘The law is clear. Broadcasters must operate in the public interest, and they will lose their licenses if they do not’.”
March 17 – Bloomberg (Greg Stohr): “US Chief Justice John Roberts said hostility toward individual Supreme Court members was creating a dangerous environment, in his first public comments since the president blasted justices who voted to strike down his global tariffs. ‘Personally directed hostility is dangerous, and it’s got to stop,’ said Roberts… Roberts didn’t mention President Donald Trump by name and said he wasn’t referring to ‘any one political perspective.’ But his comments came less than a month after an extraordinary verbal attack from Trump in response to the 6-3 ruling that upended his signature economic policy.”
Budget Watch:
March 18 – Associated Press (Fatima Hussein): “The national debt surpassed a record $39 trillion on Wednesday, a milestone that comes just weeks into the U.S.-Israeli war in Iran. The unprecedented figure highlights competing administration priorities, from passing a massive tax law and boosting defense spending and immigration enforcement to chipping away at the debt itself — the latter of which Donald Trump promised to do as both a candidate and as president.”
Trade War Watch:
March 16 – Associated Press (Ken Moritsugu and John Leicester): “China warned… U.S. President Donald Trump’s latest tariff moves could harm the countries’ trade relationship, at the end of high-level talks in Paris. Li Chenggang, China’s international trade representative, said the Chinese side had expressed serious concern about trade investigations into manufacturing in foreign countries that the Trump administration launched after the U.S. Supreme Court struck down its earlier tariffs. ‘We are concerned that the possible results of such investigations may interfere with or damage the hard-won and stable China-U.S. economic and trade relations,’ Li told journalists.”
New World Order Watch:
March 17 – Bloomberg: “Moscow and Beijing are driving closer collaboration between authoritarian states and such networks help advance repression globally, according to researchers who used AI to drill into the activities. The US-based nonprofit Action for Democracy said… its researchers built an index to track seven types of cooperation, including on funding, diplomatic activities, propaganda and tech sharing. It found that China and Russia ‘sit at the center of global authoritarian collaboration’ and were jointly involved in around half of all recorded activity. The report’s authors said that such cooperation generated compound returns because, for example, ‘surveillance infrastructure exported to one regime becomes a template for the next.’ ‘Left untracked, these dynamics risk producing a world in which repression scales across borders while democratic responses remain fragmented and reactive,’ the nonprofit said.”
March 18 – Reuters (Andreas Rinke, Ludwig Burger and John Irish): “When President Donald Trump asked countries to join a global effort against Iran and deploy ships to prise open the Strait of Hormuz… Merz told German lawmakers… he agreed Iran must not be allowed to pose a threat to its neighbours but expressed doubts about the rationale behind the U.S.-Israeli war. ‘To this day, there is no convincing plan for how this operation could succeed. Washington has not consulted us and did not say European assistance was necessary… We would have advised against pursuing this course of action as it has been pursued. Therefore, we have declared that as long as the war continues, we will not participate in ensuring freedom of navigation in the Strait of Hormuz, for example, by military means’.”
March 18 – Politico (Nette Nostlinger): “German Foreign Minister Johann Wadephul… warned of a dangerous spiral of unintended consequences if the Middle East war escalates further. ‘There is a real risk of escalation, which could plunge not only this region but the entire world into a major crisis,’ Wadephul said…”
March 18 – Wall Street Journal (Michael Nienaber): “German Chancellor Friedrich Merz called for Europe to more assertively pursue its interests in a global environment where the US under President Donald Trump and China dominate geopolitical power dynamics. Citing the European Union’s population of some 450 million people — more than quarter above that of the US — Merz said the 27-member bloc had no reason to ‘sell ourselves short.’ Instead, he said, the EU should identify its interests and leverage its economic might to ensure that they’re upheld. ‘We are learning that others depend on us as well — it is not just we who depend on them,’ Merz told lawmakers... ‘And we are learning that we can — indeed, must — use this to our advantage,’ Merz said. The comments were the most pointed yet for a German leader who has tried to navigate relations with Trump in his 10 months in office.”
March 16 – Politico (Nette Nostlinger): “Germany’s government rejected U.S. President Donald Trump’s demand that NATO allies help secure the Strait of Hormuz, declaring that the alliance had no place in the war. ‘This war has nothing to do with NATO. It’s not NATO’s war,’ Stefan Kornelius, a spokesperson for… Chancellor… Merz, told reporters... ‘NATO is a defensive alliance, an alliance for the defense of its territory,’ he added. Trump had warned NATO allies on Sunday they face a ‘very bad future’ if they refuse to help secure the Strait of Hormuz, pressing Europe to support an American effort to reopen the key maritime corridor.”
Ukraine Watch:
March 14 – Financial Times (Ben Hall, Max Seddon, Henry Foy and Amy Mackinnon): “The US-led peace process in Ukraine is fizzling out because Donald Trump is losing interest in the talks and his war against Iran is easing pressure on Russia, officials say. The conflict in the Middle East has diverted Washington’s attention from a peace deal, according to four EU diplomats... At the same time, the diplomats said, it was benefiting Russia through higher oil prices, a suspension of US sanctions and the rapid depletion of American munitions Kyiv needed. The negotiations between Ukrainian and Russian officials… were ‘really in the danger zone’, said a senior European official. ‘A pause has indeed appeared in the talks. The Americans have other priorities, and that’s understandable,’ said Kremlin spokesperson Dmitry Peskov.”
March 18 – Telegraph (Antonia Langford): “No Russian region ‘can feel safe’ as Ukraine ramps up long-range attacks, a senior Kremlin official has said. Sergei Shoigu, a former defence minister and current secretary of the country’s security council, said Kyiv’s air strikes on Russian infrastructure had surged almost fourfold to 23,000 last year. He also said such strikes were able to reach increasingly far-flung targets. ‘The pace of weapons systems development, primarily that of unmanned drone systems, and the sophistication of the methods used to deploy them are such that no region of Russia can feel safe,” he told officials in the city of Yekaterinburg…”
U.S./Russia/China/Europe/Iran Watch:
March 17 – Wall Street Journal (Thomas Grove, Milàn Czerny and Benoit Faucon): “Russia has been expanding its intelligence sharing and military cooperation with Iran, providing satellite imagery and improved drone technology to aid Tehran’s targeting of U.S. forces in the region, people familiar… said. Russia is trying to keep its closest Middle Eastern partner in the fight against U.S. and Israeli military might and prolong a war that is benefiting Russia militarily and economically. The technology provided includes components of modified Shahed drones, which are meant to improve communication, navigation and targeting... Russia has also been drawing on its experience using drones in Ukraine, offering tactical guidance on how many drones should be used in operations and what altitudes they should strike from, said the people, who included a senior European intelligence officer. Russia has been providing Iran with the locations of U.S. military forces in the Middle East as well as those of its regional allies…”
March 15 – Politico (Carlo Martuscelli): “Russia and China are aiding Iran in a number of ways, including by providing ‘military cooperation,’ Iranian Foreign Minister Abbas Araghchi said. Araghchi called Russia and China strategic partners for Tehran during its war with the U.S. and Israel… ‘We have had close cooperation in the past, which still continues, and that includes military cooperation as well,’ said the foreign minister. Iran has had ‘good cooperation with these countries: politically, economically, even militarily,’ he added.”
March 18 – Financial Times (Editorial Board): “Russia’s Vladimir Putin called the killing of Ayatollah Ali Khamenei on the first day of US and Israeli strikes on Iran a ‘cynical murder’ that violated ‘all norms of human morality and international law’. Given the Russian president’s record, his statement reeks of cynical double standards. Since then, though, beyond reportedly providing intelligence to assist Iran’s retaliation against US and allied targets, Putin has been largely quiet about the attacks on a country with which he signed a strategic partnership last year. The Russian leader is presumably following Napoleon’s maxim: never interrupt your enemy when he is making a mistake. For now, the Iran conflict is an unintended US gift to the Kremlin.”
March 18 – Wall Street Journal (Austin Ramzy and Rory Jones): “China is a longstanding friend of Iran that has helped sustain the Islamic Republic through decades of sanctions and international isolation. Since the U.S. and Israeli militaries began striking Iran late last month, Beijing has offered Tehran limited public support, condemning the killing of the Iranian leadership while calling on all sides to stop fighting. But its longstanding support for Iran could grow increasingly critical as the war continues.”
March 14 – Wall Street Journal (Timothy W. Martin): “North Korean leader Kim Jong Un oversaw a live-fire exercise for one of his top military priorities: an upgraded rocket launcher able to fire tactical nukes… North Korea said the drill featured a dozen 600 mm, ‘ultra-precision’ rocket launchers and two artillery companies. The rockets, designed for shorter-range strikes, flew more than 220 miles before hitting an island target in the waters between the Korean Peninsula and Japan. Kim, joined by his young daughter at the Saturday exercise, boasted that no tactical weapon in the world exceeds North Korea’s.”
AI Bubble/Arms Race Watch:
March 16 – Bloomberg (Josh Saul): “US data center development has slowed because the power grid is reaching its limit to accommodate more large facilities, according to… energy consultancy Wood Mackenzie. Developers added data centers that would consume about 25 gigawatts of electricity to their project pipelines in the fourth quarter of 2025, roughly half as much as they added in the third quarter. Projected capital spending by the biggest developers will decelerate in 2026 compared with the previous year for the first time since 2023, the WoodMac report states. ‘Both utilities and grid operators are essentially putting the brakes on and making it more challenging to connect data centers,’ said Ben Hertz-Shargel, WoodMac’s head of Grid Edge and the author of the report. The enormous demand for data centers hasn’t changed, he said, but ‘there’s only so much power to go around’.”
March 16 – Bloomberg (Yoolim Lee): “A global shortage of memory chips is likely to persist another four to five years because of endemic constraints in semiconductor production, the head of South Korean conglomerate SK Group said. Leading players such as SK Hynix Inc. are expanding capacity but they’re unlikely to fully sate demand till around 2030, said Chey Tae-won, whose company controls the chipmaker. Industry-wide, supply of the basic wafers that get made into chips are lagging demand by more than 20%, Chey told reporters…”
March 17 – Reuters (Katie Paul, Jeff Horwitz and Deepa Seetharaman): “Meta is planning sweeping layoffs that could affect 20% or more of the company, three sources familiar with the matter told Reuters, as Meta seeks to offset costly artificial intelligence infrastructure bets and prepare for greater efficiency brought about by AI-assisted workers. No date has been set for the cuts and the magnitude has not been finalized…”
March 14 – Wall Street Journal (Katherine Bindley): “At a Pacific Heights open house in January, a line of people made their way up the steps of a two-bedroom, one-bath cooperative. There were 85 of them—steps, not people. Eight flights, no elevator. The property received 14 offers and sold for over $1.62 million, more than $400,000 over the asking price. While much of the U.S. housing market has been stuck in a rut, slowed by elevated mortgage rates and home prices near record highs, pockets of San Francisco are rebounding in a big way. The AI boom…”
Inflation Watch:
March 18 – CNBC (Jeff Cox): “Wholesale prices rose sharply in February, providing another sign that inflation continues to percolate even aside from rising energy costs. The producer price index… increased a seasonally adjusted 0.7% on the month... Excluding volatile food and energy costs, the so-called core PPI increased 0.5%. Economists… had been looking for increases of 0.3% for both measures. For the all-items index, prices rose faster than the 0.5% pace in January. However, the core increase was less than the 0.8% for the prior month. On a 12-month basis, headline PPI inflation was at 3.4%, the most since February 2025, while core was at 3.9%...”
March 18 – Bloomberg (Marilen Martin and Christoph Rauwald): “Consumers are set to start feeling the impact of the Iran war beyond filling up their cars, with price jumps on ingredients for everyday cleaning products, tires and animal feed. Europe’s chemical makers BASF SE and Lanxess AG are among companies raising prices significantly due to shortages and higher expenses for chemical feedstocks. The ingredients go into a broad range of home and industrial detergents, coatings as well as car tires. BASF… said its suite of products for detergents and industrial products will rise by some 30% or more. The company later announced two more price increases in Europe for chemicals needed by sectors such as agriculture to keep animal feed from rotting and in coatings for cars.”
March 16 – Bloomberg (Nicholas Lua and Yongchang Chin): “The largest oil market shock on record triggered by the war in the Middle East is set to have a greater impact on products such as jet fuel and diesel than on crude, according to Goldman Sachs... ‘Prices have rallied much more for many refined products than for crude,’ analysts Yulia Zhestkova Grigsby and Daan Struyven said... The severe disruptions seen in supplies of so-called medium-heavy crude pose the risk of lower production of diesel, jet fuel and fuel oil, they said.”
March 16 – Financial Times (Martha Muir, Jamie Smyth and Christian Davies): “US diesel prices have jumped more than a third over the past month to almost $5 a gallon as the war in Iran pinches global supplies, pushing up costs of everything from transporting goods to planting crops. Average diesel prices at the pump rose to $4.99 on Monday, a 37% increase on a month ago… It marks the highest price for diesel, a fuel that is vital for industry, since the aftermath of Russia’s full-scale invasion of Ukraine in 2022.”
March 18 – Bloomberg (Charles Gorrivan): “The price of US propane is climbing at almost twice the pace of the natural gas it’s made from, threatening even more pocketbook pain for consumers already coping with surging gasoline, diesel and power costs. The rise in a niche, household-fuel industry long insulated from international events shows how the knock-on effects of the Iran war are rippling through markets that are otherwise amply supplied. Iran’s effective blockage of tanker traffic in the Strait of Hormuz has disrupted trade in propane and other gas byproducts, prompting foreign buyers to seek alternative cargoes from the US. Propane traded at the Mont Belvieu hub in Texas has jumped roughly 20% since the war kicked off…”
March 19 – Wall Street Journal (Anna Wilde Mathews): “Nearly one in 10 people who had Affordable Care Act plans last year dropped health insurance altogether, after premium costs rose sharply because of the expiration of federal subsidies... Most of those who remained in ACA plans reported larger out-of-pocket healthcare expenses in the form of higher copays, coinsurance or deductibles, according to the survey from health-research nonprofit KFF. About one-sixth of those who still have ACA coverage, or 17%, weren’t sure they would be able to afford their new premium payments for the entire year…”
March 18 – Bloomberg (Leslie Kaufman): “US home insurance premiums are set to rise for a fifth straight year in 2026 as insurers grapple with losses from extreme weather and high rebuilding costs. The average annual premium is projected to increase 4% to about $3,057 this year, after jumping 12% in 2025, according to Insurify… The expected gain follows several years of steep growth in rates. Since 2021, premiums have climbed 46%, roughly three times as much as inflation, Insurify said.”
Federal Reserve Watch:
March 18 – Associated Press (Christopher Rugaber): “The Federal Reserve kept its key interest rate unchanged… and Chair Jerome Powell highlighted the increasingly uncertain outlook for the U.S. economy and inflation in the wake of the Iran war… Fed policymakers maintained their forecast for an additional rate cut this year, but… Powell suggested that the central bank remains concerned about inflation that was still stubbornly elevated even before the conflict’s impact on gas prices. ‘The thing I really want to emphasize is, nobody knows,’ Powell said, referring to the impact of the Iran war. ‘The economic effects could be bigger, they could be smaller, they could be much smaller, they could be much bigger. We just don’t know.’ Powell said the central bank would need to see further progress in the price of goods declining as the impact of tariffs fades before cutting rates further.”
March 18 – Reuters (Michael S. Derby): “Federal Reserve Chair Jerome Powell said… he’ll stick around as head of the U.S. central bank until his successor is confirmed, and will not leave the institution until a criminal investigation into the Fed is resolved. ‘If my successor is not confirmed by the end of my term as chair, I would serve as chair pro-tem’ until that’s resolved, Powell said… following the end of the Fed’s latest two-day policy meeting. He said that is what ‘the law calls for’ and ‘that’s what we’ve done on several occasions, including involving me, and that’s what we’re going to do in this situation’.”
U.S. Economic Bubble Watch:
March 19 – Associated Press (Matt Ott): “U.S. applications for unemployment benefits fell last week… The number of Americans filing for jobless aid for the week ending March 14 fell by 8,000 from the previous week to 205,000… That’s fewer than the 215,000 new filings analysts… were expecting… The total number of Americans filing for unemployment benefits for the previous week ending March 7 rose by 10,000 to 1.86 million…”
March 17 – Reuters (Lucia Mutikani): “Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates… The pending home sales index rebounded 1.8% last month to 72.1… Contracts to purchase previously owned U.S. homes unexpectedly increased in February amid a decline in mortgage rates, but further gains are likely to be limited by the war in the Middle East that is raising oil prices and fanning inflation fears. The pending home sales index rebounded 1.8% last month to 72.1, the National Association of Realtors said…”
March 16 – New York Times (Kailyn Rhone): “The average monthly new-car payment reached $774 in January, up from $588 in January 2021, according to Edmunds… A growing share of buyers are taking on even larger loans: More than 20% of new-car borrowers agreed to pay over $1,000 a month at the end of last year, which was a record… But loan payments are only part of the strain. When insurance, gas, repairs and maintenance are included, the total cost of owning a vehicle has risen more than 40% since January 2020, according to an index from Navy Federal Credit Union. All of this pressure has begun to weigh on many households.”
China Watch:
March 15 – Bloomberg: “China’s economy rebounded in early 2026 with a surprising uptick in domestic consumption and investment, an acceleration that may prove hard to sustain if the war in Iran stalls exports. Factories revved up production as shipments overseas surged at the start of this year. Industrial output climbed 6.3% in January-February from a year earlier… Retail sales rose 2.8% in the first two months — more than triple their gain in December — while fixed-asset investment unexpectedly expanded 1.8% after contracting for the first time on record in 2025.”
March 17 – Bloomberg (Mark Cudmore): “The PBOC is on track to surpass the ECB as the world’s largest central bank this month, as measured by respective balance sheets in dollar terms.”
March 15 – Bloomberg: “China’s home price declines moderated in February… New-home prices in 70 cities, excluding state-subsidized housing, dropped 0.28% from January, when they slid 0.37%... Resale home values, which are subject to less government intervention, decreased 0.43%, the smallest decline in 10 months… Among 70 major cities tracked by the government, 10 saw new-home values climb from a month earlier, the most since last June. Most of them are top-tier cities and provincial hubs.”
Central Banker Watch:
March 19 – Bloomberg (Mark Schroers, Jana Randow, and Alexander Weber): “The European Central Bank is well placed to deal with growing dangers from the war in Iran after holding interest rates unchanged for a sixth meeting, President Christine Lagarde said. The deposit rate was left at 2% on Thursday — as predicted… The ECB warned that the conflict in the Middle East is resulting in faster inflation and slower economic expansion, saying it’s ‘determined’ to keep price gains stable around the 2% target. ‘We are both well positioned and well equipped to deal with the development of a major shock that is unfolding… We are going to continue doing what we have been doing’.”
March 18 – Financial Times (Leo Lewis): “The Bank of Japan has kept interest rates on hold, warning that the economy could be ‘dragged down’ by further increases in the price of oil and deteriorating terms of trade arising from the ongoing conflict in the Middle East. The central bank’s decision to leave the overnight call rate at around 0.75% was widely expected… But analysts said that the BoJ still managed to strike a hawkish tone, suggesting it planned to raise rates later this year.”
March 17 – CNBC (Lim Hui Jie): “Australia’s central bank… raised benchmark policy rates for a second straight time, pushing them to their highest since April 2025 at 4.1%, amid sticky inflation. The 25 bps hike was in line with expectations…, and comes as Australia’s inflation stays above the central bank’s upper limit of 3%, with the war in the Middle East risking a further rise in prices. ‘While inflation has fallen substantially since its peak in 2022, it picked up materially in the second half of 2025,’ the Reserve Bank of Australia said…”
Europe Watch:
March 15 – Wall Street Journal (Tom Fairless and Kim Mackrae): “An energy shock from the war in the Middle East is set to deliver a punishing blow to Europe’s economy, in a bitter twist for a region that had been hoping to accelerate growth this year after a long stretch of stagnation that angered voters across the continent. Policymakers are scrambling to provide relief, but their options are more limited than during Russia’s invasion of Ukraine four years ago… Today, borrowing costs are surging across the continent, and government debt in the U.K. and France is at or near the highest share of GDP in at least six decades.”
Japan Watch:
March 19 – New York Times (River Akira Davis): “Gasoline prices in Japan reached a record high this week, presenting a challenge for the nation’s popular prime minister, Sanae Takaichi, who has campaigned on a platform of shielding Japanese households from the pain of rising prices. Japan is heavily dependent on the Middle East for its supply of crude oil… In Japan, the average retail price of gasoline climbed to 191 yen, or about $1.20, per liter on Monday… That marked an 18% increase from a week earlier.”
March 17 – CNBC (Lim Hui Jie): “Japan’s exports climbed 4.2% from a year earlier in February, marking a sharp slowdown after hitting an over-three-year high in January. However, the increase was higher than the 1.6% rise expected…, and against the 16.8% jump in the previous month. Exports to mainland China, Japan’s largest trading partner, fell 10.9%, while shipments to the U.S. dropped 8%. Tokyo’s exports to Washington may weaken further after the U.S. announced Section 301 investigations that could lead to the reimposition of tariffs.”
Social, Political, Environmental, Cybersecurity Instability Watch:
March 17 – Bloomberg (Akshat Rathi and Laura Millan): “Growing global adoption of electric vehicles helped avoid the consumption of 2.3 million barrels of oil per day last year, according to… BloombergNEF. Those fossil fuel savings are expected to increase every year for the rest of the decade as more drivers turn to battery-powered vehicles, said Claudio Lubis, BNEF’s oil analyst. The research group projects that by 2030, avoided daily consumption could more than double to 5.25 million barrels under the economic transition scenario, where governments deploy technologies that are economical rather than implement policies primarily driven by climate goals.”
Geopolitical Watch:
March 17 – Reuters (Lim Hui Jie): “More than 400 people were killed in a Pakistan air force strike on a drug rehabilitation centre in Kabul, the Afghan Taliban administration said…, in the deadliest incident since the two neighbours began fighting late last year. Pakistan rejected the statement as false and misleading, saying it had ‘precisely targeted military installations and terrorist support infrastructure’ on Monday night.”