The Bloomberg MAG7 Index slumped 2.8% Friday, boosting the week’s loss to 4.9% - with the index closing the week at the lowest level since August 1st (down 15.7% y-t-d). Friday’s losses included Meta Platforms down 4.0%, Amazon 4.0%, Tesla 2.8%, and Microsoft 2.5%. For the week, Meta sank 11.4%, Alphabet 8.9%, Microsoft 6.6%, Nvidia 3.0% and Amazon 2.9%. Meta ended the week at the lowest close since April 23rd, Microsoft April 8th, Nvidia September 5th, and Alphabet November 28th. Amazon closed the week within 55 cents of the low back to May 9th. Air is leaking from the AI Bubble.
March 24 – New York Times (Maureen Farrell): “The private credit industry, a once-booming corner of the lending markets, is facing an investor exodus and heightened scrutiny of its risky practices. The bad news seems to keep coming. On Tuesday, Ares Management, an investment firm with more than $600 billion in assets, said it would block roughly half of the redemption requests from one of its private credit funds. A day earlier, the private equity giant Apollo Global Management said the same of one of its funds… Also on Monday, the debt-ratings agency Moody’s downgraded a private credit fund run by KKR to junk status, warning investors that a growing number of the fund’s outstanding loans were not being repaid and that its profitability is at risk.”
March 26 – Bloomberg (Olivia Fishlow and Ellen DiMauro): “A wave of redemption requests across the private credit industry has left more than $4.6 billion of investor capital trapped behind withdrawal limits, with more asset managers expected to impose curbs in the coming weeks. Investors have looked to pull roughly $13 billion from over a dozen funds so far this quarter… But since the vehicles can cap withdrawals at 5% of net assets per quarter, investors have only been able to access about two-thirds of the cash they’ve sought… How much investors seek to cash out, and whether the firm again opts to avoid imposing limits, will be a key to gauging pressure on the sector, market participants say.”
The crisis of confidence and run on “private Credit” continue to gain momentum. The Iran War certainly accelerated the process. At this point, however, even a rapid end to the conflict would likely not reverse the exodus. The reversal of flows has already revealed fundamental flaws and serious weaknesses in “private” high-risk lending. Historic lending and speculative cycles have largely run their courses. Importantly, the thesis of a major tightening of risky lending obstructing the AI arms race buildout is increasingly difficult to rebut.
Wall Street analysts have been playing down parallels between “private Credit” and the 2008 crisis. Many cite the lack of leverage; today’s well-capitalized banking system with limited “private Credit” exposures; sounder liquidity mechanics (i.e., fund “gates”); and manageable scale ($1.8 to $2.0TN). Fair enough.
Former New York Fed President Bill Dudley wrote a thoughtful piece last week: “Private Credit Is Bad, But Not 2008 Bad.” “Will the growing troubles in private credit precipitate a broader financial crisis? As a veteran of the 2008 subprime lending meltdown, I’m extremely hesitant to say no. Nonetheless, I don’t think it’s likely.” And Friday evening from Barron’s Randall Forsyth: “Serious but not systemic. That is how to think of the impact on the economy of the ructions in the private-credit market.”
“Private Credit” is emerging as a major issue, especially in terms of financing the AI arms race Bubble. That said, my argument is not that high-risk lending is today a paramount systemic risk. Subprime mortgages were certainly not the critical force during 2008’s near financial collapse.
Today’s risk, as it was during the 2008 crisis, is a major unwind of speculative leverage, marketplace illiquidity, money market instability, derivatives chaos, panic, and market dislocation. A crisis of confidence that commenced at the “periphery” (subprime mortgages) over time penetrated the heart (“core”) of perceived safe and liquid (money-like) financial instruments, certainly including Lehman Brothers and Wall Street “repo” and money market obligations.
Repeating a fundamental point, it is sudden fear for perceived safe “money” – as opposed to risky loans/instruments – that is the domain of panics and financial crises.
The MOVE (bond volatility) Index, while down marginally Friday (to 112), traded Thursday at 115, the high since April 25th. The MOVE spiked 30 bps in seven sessions, comparable to the “liberation day” period move. The Investment-grade (VIXIG) Volatility Index surged almost five Friday to 61.8, the highest since April 11th. Investment-grade CDS jumped 2 to 67.4, the high back to April 23rd.
The VIX (equities volatility) Index jumped 3.5 Friday to 31.05, the highest close since April 21st. High yield CDS spiked 31 bps Friday, the largest upside move since April 10th – to the high since May 1st. High yield spreads blew out 23 Friday to 334 bps - to the widest level since early May.
Major bank CDS rose (2 to 3bps) Friday, with BofA (75bps), Morgan Stanley (80bps), Citigroup (75bps), Goldman Sachs (75bps), Wells Fargo (69bps) and JPMorgan (55bps) all now at or near highs since April. Interestingly, BofA’s Global Financial Stress Index (GFSI) (“a gauge that tracks anxiety and stress levels across global financial markets”) surpassed “liberation day” levels and traded just below the March 2023 banking mini-crisis peak.
The preponderance of indicators points to a major unfolding de-risking/deleveraging dynamic.
Bitcoin was slammed 4.3% in Friday trading to 66,000, near a one-month low. Bitcoin was down 6.5% for the week, 25% y-t-d, and 47% from October highs. Bitcoin’s inability to muster a rally is ominous. The cryptocurrencies, at the speculative risk asset “periphery,” set deleveraging in motion. “Risk off” then gravitated to leveraged loans and high yield instruments, certainly including “private Credit.” Strengthening contagion effects began to work their way to big tech, a particularly crowded sector (retail, hedge funds, institutions) where major leverage has accumulated over recent years. The precious metals, favored by the levered crowd, also abruptly reversed sharply lower.
The Iran War stoked fledgling risk aversion, though markets were willing to assume a quick end to the conflict. President Trump’s repeated declarations of rapid resolution certainly fostered complacency. Another TACO moment came Monday, spurring big, though fleeting, market reversals. Brent crude traded Monday in a 15% intraday range (114.43 to 96.77), only to end the week at 114.57. Brent crude surged 4.2% in Friday trading.
March 25 – Financial Times (Editorial Board): “The damage that could be done to global energy markets by closing the Strait of Hormuz was long anticipated (except, perhaps, in the Oval Office). Less well understood was the fact that the waterway is a vital artery, too, for chemicals, metals and fertilisers. Disruption to shipping is affecting sectors from AI and semiconductors to mining and food production, compounding the energy shock. And, as with energy supplies, upheavals could persist beyond the end of US and Israeli strikes on Iran. Take helium. Qatar accounts for about one-third of global supplies of the gas, a byproduct of natural gas production at the vast Ras Laffan field. Not only are exports blocked through the strait but Ras Laffan’s infrastructure has suffered long-lasting damage from Iranian retaliatory strikes. This is bad news for the semiconductor industry, which uses helium to cool wafers during manufacturing; Taiwan and South Korea get the majority of their supplies from Qatar, whose high-purity helium is not easily substituted. Helium is also important for fibre optics, defence manufacturing and medical imaging (the gas cools MRI scanners).”
On many levels, the President’s Thursday cabinet meeting was a disturbing spectacle. For a war-time gathering, the President and his team seemed to lack the serious focus deserving of an unfolding national crisis. Many, including global political and business leaders, surely question the President’s mental fitness. If we took his comments at face value, we’d conclude the commander and chief is delusional: “We don’t need Hormuz at all… We have so much oil. Our country is not affected by this.”
Industry experts are lining up to pronounce “the worst energy disruption in history.” Unprecedented production losses for crude and myriad refined products risk devastating supply chain crises – oil and energy, fertilizer and agriculture, petrochemical and plastics, shipping and logistics – and on and on. A significant global inflationary event is now unfolding, hitting a world where inflation has been running on the hotter side for over five years. It’s slamming a highly indebted world. It threatens to destabilize global financial markets exposed to historically unparalleled levels of speculative leverage.
Deleveraging continues to gain momentum in “core” sovereign debt markets, a bastion of Trillions of speculative leverage. Ten-year Treasury yields gained another five bps this week to an eight-week high of 4.43%, with yields now having spiked 49 bps in four weeks. Benchmark MBS yields have surged 73 bps since the start of the war to 5.54%.
Pressure is even more intense in key (highly levered “core”) global bond markets. UK 10-year gilt yields traded Friday at an intraday high of 5.10%, the high since July 2, 2008. Thirty-year gilt yields traded up to 5.70%, the high back to May 1998. In just four weeks, UK yields are up 74 bps.
Italian 10-year yields rose as high as 4.14% Friday, and Greek yields to 4.07% - both highs since November 2023. French yields advanced to 3.89% (high since June 2009) and German yields to 3.13% (May 2011). In four weeks, yields have spiked 78 bps in Italy, 72 bps in Greece, 62 bps in France, and 45 bps in Germany.
Indicative of long-term inflation concerns, 30-year German yields rose Friday to 3.57% (high since May 2010) and 30-year French yields to 4.59% (June 2009). Italian and Greek long bond yields rose to 4.82% and 4.65% (both November 2023).
Market vigilantes are not in the mood to give highly indebted Japan a pass. Ten-year JGB yields jumped 11 bps Friday to 2.37% - the high back to February 1999. Thirty-year JGB yields spiked a notable 19 bps Friday to 3.71%, quickly approaching January’s spike high to a record 3.88%. As 40-year yields surged 20 bps Friday (3.905%), the dollar/yen traded to 160 for the first time since 2024.
March 26 – Bloomberg (Alexandra Harris): “Hedge funds’ borrowing in the repo market has surged 154% since the end of 2022 to $3.1 trillion, reflecting an increase in leveraged-trading strategies, according to the Office of Financial Research. By last June, qualified hedge funds — or those with more than $500 million in assets — were leveraged 2.6 times, meaning they had borrowed $2.60 for every dollar they hold… Some that follow certain strategies — particularly macro, multi-strategy and relative-value funds — were leveraged by 6 times. The hedge funds also financed trades with prime-brokerage loans from securities firms, which increased by 83% to $3 trillion over the same period. Such borrowing can increase the risks in financial markets if hedge funds are forced to unwind money-losing trades or unload other assets to meet demands to post more collateral. Hedge funds’ exposure to US Treasuries and related derivatives increased by $1 trillion to $4.1 trillion.”
Doing some quick math, hedge funds’ combined “repo” and broker loan borrowings surged $3.2 TN since 2002 to $6.1 TN. And this includes only hedge funds obligated to file SEC “form PF.” We can assume that a decent chunk of this leverage is related to Treasury “basis trades” and other speculative bond market “spread” trades relatively immune to yield gyrations.
As we witnessed in March 2020, all hell breaks loose when deleveraging, illiquidity, and dislocation engulf the highly levered Treasury “basis trade” marketplace. Markets have not yet reached that point, but they’re moving in that direction. Importantly, there are Iran War scenarios that would risk unleashing 2020 and 2008-style deleveraging and panic.
I assume levered hedge funds around the globe are intensively gaming out various war scenarios. I would see the best-case as the U.S. and Iran commencing fraught negotiations, with the U.S. and Israel winding down bombing operations in a couple weeks. After bombings subside, I’ll assume it would take some time to get tanker traffic moving again through the Strait. Even under this best-case, we could be at least a month before the Strait of Hormuz begins to meaningfully open up – and additional weeks for the backlog to clear. This would still entail major global dislocations.
The worst-case scenario would see uncontrollable escalation. Iran refuses to bow to U.S. pressure to capitulate in negotiations, while maintaining its tight grip on the Strait of Hormuz. President Trump threatens a massive “final blow” assault. This threat would include destruction of key Iranian energy infrastructure, U.S. troop deployments, U.S. direct control over the Strait of Hormuz, and perhaps even regime change.
The worst-case would see Iran categorically reject Trump’s demands, eliciting a major U.S. military response - triggering Iran retaliation against Gulf energy infrastructure and protracted hostilities – including mine laying - around the Strait of Hormuz, along with widening conflict throughout the Gulf region. Interceptor inventories run low. The Houthis enter the war, creating havoc in the Red Sea (Houthis fire first missile of the war tonight into Israel).
I’ll loosely refer to a third “base case” scenario, which would see weeks of fraught negotiations and a tailing off of overt hostilities. The President’s desire to bring the war to a conclusion puts escalation on hold. Iran talks, but refuses to capitulate, recognizing its capacity to inflict damage to fragile global markets and economies. Iran agrees to allow limited traffic through the Strait of Hormuz, so long as the U.S. and Israel suspend bombings and assassinations. Iran would buy some time, perhaps allowing shipments of drones and supplies from Russia and other replenishments from China. Russia might even surreptitiously promote this scenario to Iranian leadership, support that would place U.S./Russian relations on a collision course. This would drag the conflict out for months – “hot war” to “cold war” to elevated risk for hotter war.
It's difficult for me this evening to envisage high probability for a best-case outcome. Iran doesn’t appear poised to capitulate. History argues they won’t. They’re fighting for survival and playing for time, confident Trump has no appetite for a protracted war, and believes it can exact a heavy price on global markets and Gulf energy infrastructure. The President may gamble that ongoing intense bombings will force capitulation, with Iranian retaliation holding the potential to further destabilize severely impaired energy markets.
Consequences are dire if traffic doesn’t get flowing through the Strait of Hormuz (“Strait of Trump”). I assume the major build up in U.S. forces in the Gulf is in preparation for taking control of the Strait. How much capacity Iran has in opposing U.S. intervention is a huge unknown. They’ve had decades to prepare for such a confrontation. Their firepower has been severely depleted, but they surely retain capacity for asymmetric war tactics.
March 28 – Bloomberg (Hadriana Lowenkron and Eric Martin): “The US and Israel bombed Iranian nuclear and steel facilities on Friday, while Iran retaliated across the Persian Gulf including a reported hit on a base in Saudi Arabia… A strike on Prince Sultan Air Base in Saudi left at least 10 US troops wounded, including two seriously, and damaged several refueling aircraft… Also on Friday, Houthi militants in Yemen, who are backed by Iran, said they were ready for direct military action if any other countries joined the US and Israel, if the Red Sea was used for hostile operations against Iran, or if escalation continued against Tehran’s proxy groups…”
March 28 – The Guardian (Hannah Ellis-Petersen): “Gulf countries have raised concerns over the prospect of attacks by Iran-backed militias and proxy armed groups in the region, which they fear could destabilise their regimes and escalate the war in the Middle East. In a joint statement this week, Qatar, Kuwait, the United Arab Emirates, Bahrain, Saudi Arabia and Jordan condemned Iranian attacks on their soil, both as strikes carried out directly from Iran and ‘through their proxies and armed factions they support in the region’.”
March 23 – Axios (Ben Geman and Chuck McCutcheon): “Former Defense Secretary James Mattis offered a sobering take Monday on the Strait of Hormuz, criticizing the Trump administration for what he saw as a failure to think strategically about Iran… ‘We’re in a tough spot, ladies and gentlemen, and I can’t identify a lot of good options,’ the retired Marine general told attendees at the CERAWeek… conference. If President Trump declares victory and pulls back the U.S. military, Iran ‘would now say we own the Strait,’ said Mattis… ‘I think that you could see a tax for any ship going through — something completely unsustainable in the international market,’ Mattis said. The overall U.S. and Israeli strategic objectives for Iran remain ‘murky,’ he said. ‘The Americans are fighting in a markedly limited war, and I think that what we’re seeing is a situation where [airplane] targetry never makes up for a lack of strategy,’ he said. Threat level: Mattis also explained why naval protection of ships would prove a huge challenge and leave major vulnerabilities. Even a degraded Iran retains the ability to attack ships from shore along a vast stretch of coastline in the wider region, he said. ‘If you look at the Texas Gulf Coast, that’s about 367 miles, that gives you an idea of how difficult this will be for the U.S. Navy to try and protect ships in that shipping lane, 600 miles down the Gulf, 100 miles through the Straits and then out into the water… And they’ve got anti-ship cruise missiles that could be fired off the back of a pickup truck that can go 100 miles. So, there’s the problem’.”
Gaming this out, I see uncomfortably high probabilities for problematic market outcomes. The leveraged speculating community is surely looking at various scenarios, with the current market risk vs. reward calculus extraordinarily unattractive. For one, the risk of a highly destabilizing scenario is alarmingly high. Furthermore, typical policy responses are not assured. With inflationary risks escalating, the Fed will be slow and initially cautious with QE. Meanwhile, the President and his “put” suffer a credibility crisis.
Ongoing pressure to de-risking/deleverage seems reasonable. That said, powerful short squeezes and hedge unwinds could erupt at any time, providing markets sporadic liquidity boosts. But I expect marketplace liquidity to become an increasingly pressing issue. This week’s Treasury auctions warned of waning demand. And it’s also worth noting this week’s $53 billion drop in money market fund assets and the $33 billion fall in commercial paper borrowings, what I view as indications of nascent fixed income deleveraging.
March 25 – Financial Times (Costas Mourselas): “London-based hedge fund Caxton Associates has extended its losses to more than $1.3bn this month as the Iran war causes shockwaves in global markets. Caxton’s $9bn Macro fund… is down 15% this month to Friday, according to two people… The FT reported earlier this month that the fund had lost 7%, or at least $600mn, in the first week of March. The losses make Caxton one of the highest profile hedge funds to suffer losses as the conflict in the Middle East upends energy and bond markets.”
So far, not much talk of hedge fund losses. Expect things on that front to heat up. There’s clearly pain out there and ample impetus to rein in risk and leverage.
For the Week:
The S&P500 slumped 2.1% (down 7.0% y-t-d), and the Dow declined 0.9% (down 6.0%). The Utilities rallied 3.0% (up 7.5%). The Banks slipped 0.5% (down 9.4%), and the Broker/Dealers dipped 0.5% (down 6.4%). The Transports gained 1.8% (up 4.7%). The S&P 400 Midcaps increased 0.4% (up 0.2%), and the small cap Russell 2000 gained 0.5% (down 1.3%). The Nasdaq100 dropped 3.2% (down 8.4%). The Semiconductors slumped 2.8% (up 5.3%). The Biotechs slipped 0.3% (down 7.5%). With bullion increasing $2, the HUI gold index rallied 7.1% (up 4.3%).
Three-month Treasury bill rates ended the week at 3.5976%. Two-year government yields added a basis point to 3.91% (up 44bps y-t-d). Five-year T-note yields rose six bps to 4.07% (up 34bps). Ten-year Treasury yields gained five bps to 4.43% (up 26bps). Long bond yields added three bps to 4.97% (up 13bps). Benchmark Fannie Mae MBS yields jumped seven bps to 5.54% (up 50bps).
Italian 10-year yields surged another nine bps to 4.05% (up 50bps y-t-d). Greek 10-year yields gained five bps to 3.99% (up 55bps). Spain's 10-year yields added five bps to 3.63% (up 34bps). German bund yields rose five bps to 3.09% (up 24bps). French yields rose eight bps to 3.83% (up 27bps). The French to German 10-year bond spread widened about three to 74 bps. U.K. 10-year gilt yields slipped two bps to 4.97% (up 50bps). U.K.’s FTSE equities index recovered 0.5% (up 0.3% y-t-d).
Japan’s Nikkei 225 Equities Index was unchanged (up 6.0% y-t-d). Japan’s 10-year “JGB” yields jumped 11 bps to 2.39% (up 32bps y-t-d). France’s CAC40 recovered 0.5% (down 5.5%). The German DAX equities index declined 0.4% (down 8.9%). Spain’s IBEX 35 equities index recovered 0.5% (down 2.9%). Italy’s FTSE MIB index rallied 1.3% (down 3.5%). EM equities were mixed. Brazil’s Bovespa index rallied 3.0% (up 12.7%), and Mexico’s Bolsa index jumped 4.0% (up 3.6%). South Korea’s Kospi sank 5.9% (up 29.1%). India’s Sensex equities index fell 1.3% (down 13.7%). China’s Shanghai Exchange Index declined 1.1% (down 1.4%). Turkey’s Borsa Istanbul National 100 index dropped 2.7% (up 12.8%).
Federal Reserve Credit increased $10.6 billion last week to $6.614 TN, with a 15-week expansion of $123 billion. Fed Credit was down $2.276 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.887 TN, or 77%. Fed Credit inflated $3.803 TN, or 135%, since November 7, 2012 (698 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped another $16 billion last week to $3.009 TN - the low back to January 2012. “Custody holdings” were down $288 billion y-o-y, or 8.7%.
Total money market fund assets (MMFA) dropped $53 billion to $7.803 TN - with a 38-week surge of $781 billion, or 15.2% annualized. MMFA were up $789 billion, or 11.3%, y-o-y - having ballooned a historic $3.182 TN, or 69%, since October 26, 2022.
Total Commercial Paper sank $32.8 billion to $1.363 TN. CP contracted $29 billion, or 2.1%, y-o-y.
Freddie Mac 30-year fixed mortgage rates jumped 16 bps to 6.38% (down 27bps y-o-y). Fifteen-year rates surged 21 bps to 5.75% (down 14bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up nine bps to 6.50% (down 29bps).
Currency Watch:
For the week, the U.S. Dollar Index increased 0.5% to 100.193 (up 1.9% y-t-d). On the upside, the Brazilian real increased 1.5%. On the downside, the Australian dollar declined 2.1%, the Norwegian krone 1.9%, the New Zealand dollar 1.5%, the Swedish krona 1.4%, the Swiss franc 1.4%, the Canadian dollar 1.2%, the Mexican peso 1.2%, the Japanese yen 0.7%, the British pound 0.6%, the euro 0.5%, the South African rand 0.5%, the Singapore dollar 0.5%, and the South Korean won 0.4%. China's (offshore) renminbi slipped 0.11% versus the dollar (up 1.11% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index was little changed (up 22.3% y-t-d). Spot Gold was about unchanged at $4,494 (up 4.0%). Silver recovered 2.7% to $69.7617 (down 2.7%). WTI Crude added $1.41, or 1.4%, to $99.64 (up 74%). Gasoline slipped 1.1% (up 90%), while Natural Gas declined 2.3% to $3.025 (down 18%). Copper rallied 2.2% (down 3%). Wheat gained 1.6% (up 19%), while Corn slipped 0.8% (up 5%). Bitcoin sank $4,600, or 6.5%, to $65,940 (down 24.8%).
Market Instability Watch:
March 26 – Financial Times (Kate Duguid and Ian Smith): “The $30tn US Treasury market is showing growing signs of strain, as turmoil in the Middle East drives swings in bonds that underpin the financial system. The ease of trading in the world’s biggest and most important financial market has deteriorated in recent weeks, even as dealing remains fluid, according to Wall Street banks and investors… Liquidity, the ease with which traders can buy or sell, ‘in rates and macro products has deteriorated over the last month’, added Matthew Scott, head of core fixed income and multi-asset trading at AllianceBernstein. JPMorgan… similarly noted this week that the size of trades required to move prices, known as ‘market depth’, has fallen by nearly as much as it did following Trump’s liberation day announcement.”
March 23 – Bloomberg (Finbarr Flynn and Ruth Carson): “The specter of stagflation caused by the Iran war has wiped out more than $2.5 trillion from the value of global bonds in March, on track for the biggest monthly loss in more than three years. Bonds are tumbling as a surge in oil prices quickens inflation, which erodes the value of the fixed payments from debt. While the slide in bonds’ market value is less than the roughly $11.5 trillion lost in global equities, it’s perhaps more unexpected as debt typically gains in times of geopolitical turmoil.”
March 26 – Wall Street Journal (Chelsey Dulaney): “The costs of shielding the global economy from the most severe energy shock in decades are adding up—just when governments can least afford it… The state of Georgia suspended its 33 cents-a-gallon gas tax, with other U.S. states considering doing the same. The U.K. government has promised to help pay some consumers’ heating-fuel bills. China, Hungary and Japan have limited prices at the gas pump. The efforts contain inflation but strain already-groaning government budgets…In Asia, the region most reliant on Middle Eastern energy, China, South Korea and Thailand have restricted fuel exports. Germany’s finance minister has proposed a windfall tax on energy companies… The world came into the war shackled with more than $100 trillion in public debt, limiting governments’ ability to spend aggressively the way they did in the pandemic and the 2022 energy crisis. Interest rates are far higher today…”
March 24 – Bloomberg (Alice Atkins): “The conflict in the Middle East has rattled markets around the world, but the gyrations have been especially pronounced in UK bonds, which are particularly vulnerable to jitters over inflation and strained government finances… Traders are betting that the Bank of England will raise rates by at least half a percentage point this year. It’s a grim backdrop for a country already contending with fragile finances and political challenges. The rise in borrowing costs is making it harder for the government to meet its fiscal targets…”
March 27 – Reuters (Libby George): “A record start to the year for emerging-market debt sales has largely ground to a halt as worries over the Iran war create havoc in the markets and push up borrowing costs, bankers and investors told Reuters, a situation that places a number of nations in limbo. The near-freeze underlines the precarious position for many emerging economies that until a month ago had enjoyed booming demand for their debt, defying tariffs and other geopolitical tumult.”
March 24 – Bloomberg (Edward Bolingbroke): “A rush by bond traders to unwind US futures positions amid the selloff triggered by war in Iran is running its course, setting the stage for new wagers that will determine whether the rout reverses or deepens. Just before hostilities broke out on Feb. 28, positions in US bond futures were heavily skewed toward lower rates… Those worries were abruptly replaced by inflation fears as the war sparked a surge in oil prices, prompting traders who were caught off guard to exit their positions, in turn accelerating the market decline.”
March 26 – Bloomberg (Alex Harris): “Recent activity in funding markets shows a quiet push by financial institutions to build up buffers that would help protect against any credit meltdowns or market distress, a sign they perceive rising risks even as overall conditions remain stable for now. A cluster of indicators — from increases Federal Home Loan Bank lending to shifts in money‑market fund allocations — all suggest that institutions, at the margins, are positioning themselves more defensively and are in some cases paying up to do so. Apollo Global Management Inc., through its insurance arm Athene, was the second‑largest borrower in the entire FHLB system last year, a sign private‑credit platforms are part of this move.”
March 25 – Bloomberg (Davide Barbuscia): “A New York Fed index… signaled that the US corporate bond market saw more dislocations in March, with the high-grade bond market more bruised than its high-yield counterpart. The Corporate Bond Market Distress Index, which the Federal Reserve of New York launched in 2022 to assess brewing risks in the US credit market, jumped earlier this month to the highest level since May 2025… ‘Credit market functioning deteriorated over the past month,’ the New York Fed said... ‘The investment-grade CMDI sector increased more than its high-yield counterpart’.”
March 23 – Bloomberg (Scott Carpenter): “Fannie Mae and Freddie Mac have begun placing sizable orders to purchase mortgage-backed securities, stepping into a market roiled by widening bond spreads and a surge in volatility, according to a person with direct knowledge… The government-controlled entities are moving to capitalize on a sharp selloff while expanding their already significant portfolios of bonds and loans… Their efforts follow a directive two months ago from President Donald Trump instructing the companies to acquire $200 billion of MBS as part of a push to drive down mortgage rates and bolster housing affordability.”
Leveraged Speculation Watch:
March 20 – Financial Times (Katie Martin): “The immense pressure of the war in Iran is poking out in some strange corners of the financial markets, such as Korean stocks and Romanian debt. Every asset class and commodity is taking some kind of strain. It is hard… to pick the market moves that really matter… A lot of very similar, very crowded bets among hedge funds, all anticipating further declines in interest rates, hit a wall as the abrupt rise in oil prices awoke inflation from what had appeared to be a nice nap.”
March 24 – Bloomberg (Caleb Mutua and Katherine Doherty): “Citadel Securities posted a record $12.2 billion in trading revenue last year, as the market-making arm of billionaire Ken Griffin’s empire continues in its bid to compete with the largest trading desks globally. The result marks a 25% increase from the previous full-year record of $9.7 billion in 2024… The company generated about $6.5 billion in earnings before interest, taxes, depreciation and amortization for 2025, also an increase on the prior year, the people said.”
U.S. Credit Trouble Watch:
March 24 – Bloomberg (Olivia Fishlow and Laura Benitez): “Two of the biggest names in private credit, Ares Management Corp. and Apollo Global Management Inc., blocked investors from getting even half of the money they wanted out of their funds, a sign of mounting strain in the $1.8 trillion market. The $10.7 billion Ares Strategic Income Fund limited withdrawals to 5% of shares after clients sought to redeem 11.6%... That followed the $15.1 billion business development company, Apollo Debt Solutions, which said Monday it was imposing the same cap after requests to pull 11.2%. Combined, the two firms’ caps mean that roughly $1.5 billion worth of redemptions will be blocked and remain invested in the funds.”
March 25 – Axios (Emily Peck): “It may be time to start listening to the private credit Cassandras. Private credit is now a multitrillion-dollar market, and the fallout from an upheaval in it could hit insurers, banks and even consumers. Just this week, two of the biggest players in the market — Apollo Global and Ares — said they were limiting the amount of money investors can withdraw from their funds to existing thresholds even as investors are clamoring to get their money back… Goldman Sachs analysts estimate that in a worst-case scenario for private credit loan defaults, losses could rise to about $105 billion. That would mean a cutback of 5-6% in new lending to the private sector. Sounds bad, but Goldman notes that there was a 55% pullback in the wake of the financial crisis.”
March 23 – Bloomberg (Ellen DiMauro, Olivia Fishlow, Rene Ismail, and Demetrios Pogkas): “Stephen Nesbitt was on no one’s list of Wall Street heavyweights when he bumped into a thirty-something salesman pitching the next big thing for wealthy investors: private credit. Nesbitt — who, as it happened, had written a book on private debt — took the idea and ran with it. Within a few years, he and his son Blake transformed their modest consulting business, Cliffwater LLC, into an unlikely giant. Their strategy: rather than sweat the details of every direct loan themselves, they’d piggyback on the firms that did. They’d also invest in industry heavyweights, creating something akin to a fund-of-private-credit-funds. Now the father-and-son team, who rode private credit on the way up, risk falling hard on the way down… Concerns center around the $33 billion Cliffwater Corporate Lending Fund, the largest of its kind in private credit.”
March 25 – Bloomberg (Davide Scigliuzzo): “A private credit fund managed by Ares Management Corp. posted its steepest monthly loss on record in February, providing further evidence of deteriorating performance in the $1.8 trillion private credit market. The Ares Strategic Income Fund, a non-traded business development company created in December 2022, lost 0.68% in February… February was the worst month for the broader leveraged loan market since September 2022. Including a small loss in January, the fund, which manages nearly $23 billion of assets, is down 0.7% so far this year.”
March 24 – Financial Times (Lee Harris and Robert Smith): “The US Securities and Exchange Commission has questioned whether Egan-Jones, the small credit rating provider that has come under fire for its grades on private credit loans, can ‘consistently produce credit ratings with integrity’. The regulator said an application by Egan-Jones to rate new classes of debt ‘raises questions about the adequacy of [Egan-Jones’] financial and managerial resources’ to produce the ratings. Questions over the adequacy of Egan-Jones’ resources also stemmed from ‘other non-public information available to the commission’, the SEC added.”
March 23 – Bloomberg (Caleb Mutua): “JPMorgan… is offering clients a new way to bet against the debt of five hyperscalers, as investors seek more-liquid hedges amid an unprecedented borrowing spree to finance artificial-intelligence infrastructure. The bank last month launched a basket of credit default swaps in Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Oracle Corp… Hedge funds and other investors can buy the basket to express a bearish or bullish view on the CDS, the people said. Citadel Securities started making markets in November for two baskets of corporate bonds issued by four of the hyperscalers in November.”
March 26 – Bloomberg (Casey He): “US states that have legalized sports betting have seen a rise in delinquency rates on consumer credit products and a decrease in credit scores, according to… the Federal Reserve Bank of New York. Among people under 40 — the main demographic for sports betting — the share who were at least 90 days late on a credit card payment rose 7.9% after legalization… For people in that age group, auto loan delinquencies increased by 5.6%, according to the paper by Jacob Goss… and Daniel Mangrum… ‘Our findings suggest that sports betting can have dramatic implications for household financial stability,’ the authors wrote…”
Global Credit Watch:
March 25 – Reuters (Yamini Kalia): “Barclays is scaling back its asset-based lending to smaller borrowers after its exposure to collapsed Market Financial Solutions Ltd and Tricolor Holdings left the firm facing losses… The British bank is shifting its focus to loans and securitizations for larger corporates, the report said, citing people who asked not to be identified discussing private information.”
Iran War Watch:
March 26 – Axios (Barak Ravid): “The White House and the Pentagon are considering sending at least 10,000 additional combat troops to the Middle East in the coming days… If the Trump administration decides to send extra troops, it will significantly increase the number of combat soldiers the U.S. has in the region. It is another signal that a U.S. ground operation in Iran is being seriously prepared. The massive surge in ground troops is being considered as President Trump says the U.S. is negotiating with Iran on a deal to end the war. Iranian officials haven’t agreed yet to hold a high-level meeting with the U.S. and they are suspicious that the U.S. diplomatic push is another trick.”
March 26 – Axios (Barak Ravid): “The Pentagon is developing military options for a ‘final blow’ in Iran that could include the use of ground forces and a massive bombing campaign, according to two U.S. officials... A dramatic military escalation will grow more likely if no progress is made in diplomatic talks and, in particular, if the Strait of Hormuz remains closed. Some U.S. officials think a crushing show of force to conclude the fighting would create more leverage in peace talks or simply give Trump something to point to and declare victory. Iran also has a say in how the war ends, and many of the scenarios under discussion would risk prolonging and intensifying the fight… Officials and sources familiar… describe four major ‘final blow’ options Trump could choose from: Invading or blockading Kharg Island, Iran’s main oil export hub. Invading Larak, an island that helps Iran solidify its control of the Strait of Hormuz… Seizing the strategic island of Abu Musa and two smaller islands, which lie near the western entrance to the strait and are controlled by Iran but also claimed by the UAE. Blocking or seizing ships that are exporting Iranian oil on the eastern side of the Hormuz Strait.”
March 26 – Financial Times (Najmeh Bozorgmehr): “Since the US and Israel launched their strikes on Iran, they have killed not only Ayatollah Ali Khamenei but a string of other senior figures. As strikes pounded Iranian cities, Tehran has sought to project continuity — keeping powerful institutions intact even as the country’s ultimate decision maker, senior military figures and top security official were assassinated… Political shifts appear to have been managed discreetly, with no visible infighting — at least for now. But the war is a major turning point in the Islamic republic’s 47-year history. Analysts say the conflict has created a regime that looks more hawkish and militaristic at home and abroad, with the Islamic Revolutionary Guard Corps wielding more clout than before the war.”
March 26 – Wall Street Journal (David S. Cloud, Dov Lieber and Milan Czerny): “The U.S. and Israel are pounding Iran’s missile-launching sites, hitting some over and over across almost a month of war. But Tehran’s missiles keep flying… Even in small numbers, the weapons have helped Tehran achieve its goals—prolong the conflict, raise the economic costs on oil-exporting Gulf countries and in the U.S., and survive to fight another day. ‘They’re not doing the big volleys like they were doing in the early days, but they don’t need to,’ said retired Gen. Joseph Votel, the former commander of U.S. Central Command. ‘All they really have to do is get something through, and they get a big bang for the buck’.”
March 26 – Financial Times (Mehul Srivastava and Neri Zilber): “The Israeli military is increasingly sceptical that regime change in Iran will be possible in the coming weeks, casting doubt on one of Prime Minister Benjamin Netanyahu’s core war aims as the Islamic republic shows its ability to endure intense bombardment. Two people familiar with the matter said the prevailing view within military intelligence was that the war had not created the conditions for ousting the Islamic regime in the near future. One of them… said it appeared that the aerial campaign had yet to measurably erode the Iranian regime’s hold on power…”
March 24 – New York Times (Julian E. Barnes, Tyler Pager and Eric Schmitt): “Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, has been pushing President Trump to continue the war against Iran, arguing that the U.S.-Israeli military campaign presents a ‘historic opportunity’ to remake the Middle East, according to people briefed… In a series of conversations over the last week, Prince Mohammed has conveyed to Mr. Trump that he must press toward the destruction of Iran’s hard-line government… Prince Mohammed… has argued that Iran poses a long-term threat to the Gulf that can only be eliminated by getting rid of the government.”
March 23 – Wall Street Journal (Summer Said and Jared Malsin): “U.S. allies in the Persian Gulf are inching toward joining the fight against Iran, getting tougher following persistent attacks that have disrupted their economies and risk giving Tehran long-term leverage over the Strait of Hormuz. The recent steps support America’s ability to carry out airstrikes and open up a new line of attack on Tehran’s finances. They don’t yet go as far as deploying their militaries openly in the fight, a line the Gulf’s rulers have hoped not to cross, though pressure is building as Iran threatens to exert greater sway over the energy-rich region.”
March 25 – Reuters: “Hezbollah chief Naim Qassem said… in a televised speech read on his behalf that negotiating with Israel under fire amounts to imposed surrender and called for unity against Israel. The speech… said Hezbollah fighters were prepared to continue ‘without limits’.”
March 26 – Reuters (Mohammed Ghobari and Emma Farge): “Yemen’s Iran-aligned Houthi movement, whose attacks on the Red Sea caused international shipping and trade chaos during the Gaza war, stands ready to strike the key waterway again in solidarity with Tehran, one Houthi leader told Reuters… If the Houthis open a new front in the conflict, one obvious target would be the Bab al-Mandab Strait off the coast of Yemen, a key shipping chokepoint and narrow passageway that controls sea traffic towards the Suez Canal… ‘We stand fully militarily ready with all options. As for other details having to do with determining zero hour they are left to leadership and we are monitoring and following up with the developments and will know when is the suitable time to move,’ said the Houthi leader…”
March 23 – Bloomberg (Ben Bartenstein, Fiona MacDonald, Sam Dagher, and Mirette Magdy): “Donald Trump’s decision to back down from his threat to destroy Iran’s power infrastructure came after US allies and Gulf countries privately warned the president of the dangers of following through with his threat, according to people familiar… The US president said Monday he was giving Iran a five-day reprieve from his threatened action, pointing to new talks with Tehran he believed could broker a deal that would resolve the conflict. But Trump’s decision came after some allies cautioned that the war was quickly becoming a disaster. Regional partners told the US that permanent damage to Iranian infrastructure would almost inevitably result in a failed state after the conflict ended…”
March 22 – Reuters (Maayan Lubell, Alexander Cornwell and Idrees Ali): “Iran said on Sunday it would strike the energy and water systems of its Gulf neighbours in retaliation if U.S. President Donald Trump follows through with a threat delivered a day earlier to hit Iran’s electricity grid in 48 hours, escalating the three-week-old war… Iran’s Parliament Speaker Mohammad Baqer Qalibaf doubled down, writing on X that critical infrastructure and energy facilities in the Middle East could be ‘irreversibly destroyed’ should Iranian power plants be attacked. Iran’s powerful Revolutionary Guards said it would also mean the shipping lane where a fifth of global oil and liquefied natural gas normally transits along Iran's southern coast would remain shut.”
March 25 – Wall Street Journal (Yaroslav Trofimov): “Video clips released by Iranian-backed Iraqi militias this week looked eerily familiar to anyone who has followed the war in Ukraine. Drones piloted by fiber-optic wires that render jamming useless cruised above an American base in Baghdad. Then, the first-person-view drones, also known as FPVs, dived to strike their targets: an American Black Hawk helicopter on the ground and an air-defense radar system. It is a new way of war, and it has come to the Middle East… ‘Any U.S. boots on the ground or warships in the Gulf will be ‘close in’ targets, and FPV drone use will be part of both sides’ capabilities,’ said Martin Sampson, a retired Royal Air Force air marshal… He heads the Middle East branch of the International Institute for Strategic Studies…”
Iran War Ramifications Watch:
March 26 – New York Times (Alex Morales): “A month into its war with the United States and Israel, Iran is still using its stranglehold on the Strait of Hormuz to its advantage… The shortages have roiled the economies of many countries, especially those in Asia. In recent days, Tehran has projected itself as the controller of the waterway, saying it will let ships from certain countries go through the strait, through which a fifth of the world’s oil and gas supplies travels in normal times. Iran has allowed the passage of a small number of ships, most apparently headed for Asia, but it has continued to threaten vessels linked to Israel, the United States and its allies.”
March 23 – Financial Times (Chris Krebs): “The Strait of Hormuz is 21 miles wide at its narrowest point. Twenty-five per cent of the world’s traded oil passes through it. Everyone has been focused on that. But the strait also carries the fertiliser components that underpin roughly half the world’s food supply. And Iran has in effect closed it… during the four-week window when farmers in the northern hemisphere apply nitrogen to their crops. Gulf states account for 49% of globally traded urea and 30% of ammonia, perishable contributors to the nitrogen cycle that makes high-yield agriculture possible. When that supply chain stops, the effects accumulate quietly in soil chemistry and planting decisions over the months that follow.”
March 24 – Bloomberg (Pratik Parija, Ilena Peng, and Eleanor Thornber): “Governments are rushing to secure supplies of critical crop nutrients ahead of spring planting, as the Middle East war chokes off the flow of commodities and amplifies fears of a global food crisis. Fertilizers exemplify the tight link between energy and food prices, underpinning harvests worldwide. The Middle East is a vital supplier, rich in both mineral reserves and the gas needed to produce nutrients for staples like corn, wheat and rice. With the Strait of Hormuz effectively shut, shipments have ground to a halt as Iran… In turn, prices of urea — the most widely used nitrogen fertilizer — have surged, with phosphate supplies also at risk. Much of global stock is tied to the Persian Gulf, and panic is spreading across major agricultural economies. Top exporters China and Russia are curbing some crop nutrient sales…”
March 25 – Bloomberg (Claire Jiao and Josh Xiao): “Governments across Asia are preparing for worst-case energy scenarios that could include a prolonged and severe disruption to supplies, as the US and Iran remain at odds over proposals to end a conflict that has roiled global markets. South Korea shifted into crisis mode on Wednesday, setting up an emergency economic task force to urgently prepare for adverse scenarios. The Philippines declared a national emergency, citing an ‘imminent danger of a critically low energy supply.’ Japan is reviewing its entire supply chain of petroleum-related products as the likelihood of shortages and knock-on effects across the economy grows, while India’s Prime Minister Narendra Modi warned the war could cause unprecedented challenges for the nation.”
March 25 – Politico (James Bikales and Ben Lefebvre): “Global energy leaders have been jolted by the enormity of what the U.S.-Israel war with Iran means for their business — and they’re not liking what they’re seeing. It’s the second time in four years that top White House officials have taken the stage at the CERAWeek by S&P Global conference to plead with producers to ramp up their drilling to cover supply disruptions from war-driven oil and natural gas price shocks... ‘We’ve not seen anything like this — there’s been no disruption of this scale in the past,’ Gareth Ramsay, chief economist at oil and gas giant BP, told the conference. ‘It’s every oil analyst’s study piece or worst nightmare — one that we never thought would happen’.”
March 25 – Wall Street Journal (Benoît Morenne and Collin Eaton): “Standing in front of a crowd of oil-and-gas executives this week, Energy Secretary Chris Wright reiterated that the chaos in global energy markets birthed by the U.S.-Iran war would be ‘short term.’ But on the stage and sidelines of a global energy conference in Houston, chief executives painted a much bleaker picture: Financial markets aren’t accurately reflecting the gravity of the crisis, the war is crippling the world’s fuel supplies, and the industry’s Middle East operations are at risk, they said… Some executives are privately expressing frustration with the administration’s optimistic messaging and say officials have shared no coherent plan for withdrawing the U.S. from a deepening crisis. They say price gyrations and the uncertainty hanging over the conflict make it all but impossible to plan investments—and that the disruption is already far-reaching.”
March 24 – CNBC (Spencer Kimball): “Kuwait… said Iran’s closure of the Strait of Hormuz amounts to an economic blockade of Gulf Arab oil producers, warning that the impact is beyond catastrophic and will trigger a domino effect across the world. ‘We are outraged by this attack against us,’ Sheikh Nawaf al-Sabah, the CEO of the Kuwait Petroleum Corp., told the oil industry at S&P Global’s CERAWeek energy conference... ‘This is an attack not only against the Gulf, but it is an attack that is holding the world’s economy hostage,’ said al-Sabah… ‘It’s a domino effect… The costs of this war don’t stay within geographical lines in this region. They extend all the way through the supply chain’.”
March 22 – Bloomberg (Ben Westcott): “More than 40 energy assets across nine countries in the Middle East have been ‘severely or very severely’ damaged by the war, International Energy Agency Executive Director Fatih Birol said… The damage means it will take some time for the oil fields, refineries and pipelines to come back online, Birol said… The effect of the current disruptions is equivalent to the two major oil crises in the 1970s and the 2022 natural gas crisis after Russia invaded Ukraine ‘all put together,’ Birol said.”
March 23 – Associated Press (Charlotte Graham-McLay): “The head of the International Energy Agency said Monday that the global economy faces a ‘major, major threat’ because of the Iran war. ‘No country will be immune to the effects of this crisis if it continues to go in this direction,’ Fatih Birol said… The crisis in the Middle East, he said, has had a worse impact on oil than the two oil shocks of the 1970s combined, and a worse effect on gas than the Russia-Ukraine war.”
March 24 – Bloomberg (Nathan Risser and Kevin Crowley): “Chevron Corp. is warning that California is careening toward an energy crisis because of the Iran war and that the company may quit refining oil in the state unless officials roll back taxes and regulations. California, the most populous US state, is highly exposed to the disruption rippling across commodity markets because it imports about 20% of its refined fuels from Asia.”
March 22 – Financial Times (Mohamed El-Erian): “But among the many other questions investors and policymakers should consider is a financial one: how will the relationship of the Gulf countries with international capital markets change in the short term? The six members of the Gulf Cooperation Council — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — have collectively grown over decades into one of the most consequential forces in global finance, investing across the world. But there is a risk that increased domestic need for funds in the wake of the war may have a temporary impact on those flows even if the long-term position of the countries is not in question.”
March 26 – Bloomberg (Alex Morales): “UK Prime Minister Keir Starmer suggested he won’t be bullied by Donald Trump in a further demonstration of how the US president’s war on Iran has frayed the so-called special relationship between their two countries. ‘My own view is that a lot of what is said and done has been to put pressure on me to change my mind, but I’m not going to do so,’ Starmer told Beth Rigby of Sky News… ‘When it came to the Iran war, I’ve said we’re not going to get dragged in because my judgment is that’s not in the interests of our country’.”
March 25 – Wall Street Journal (Bojan Pancevski and Max Colchester): “Authorities are investigating Iran’s suspected involvement in a string of terrorist attacks in Europe that have targeted Jewish sites in response to the war in the Middle East, security officials say. They suspect Iranian agents recruited individuals online to carry out attacks on Jewish schools, synagogues and companies linked to Israel, and set up a bogus group to claim responsibility for them.”
Trump Administration Watch:
March 26 – Associated Press (Jon Gambrell and David Rising): “Iran and the United States appeared at an impasse Thursday, hardening their positions over ceasefire talks and setting the stage for another potential escalation in the Middle East war… Meanwhile, President Donald Trump extended his deadline for Iran to open the Strait of Hormuz to April 6… Sirens over Israel warned of barrages of incoming Iranian missiles, and Gulf nations worked to intercept fire... In a war that appears defined by who can take the most pain, the U.S. has offered shifting objectives…”
March 26 – Wall Street Journal (Annie Linskey, Alexander Ward and Alex Leary): “President Trump has told associates in recent days that he wants to avoid a protracted war in Iran and that he hopes to bring the conflict to an end in the coming weeks. Nearly one month into the war, the president has privately informed advisers he thinks the conflict is in its final stages, urging them to stick to the four-to-six-week timeline… White House officials planned a mid-May summit with Chinese leader Xi Jinping in Beijing with the expectation that the war would be concluded before the meeting begins… The problem is Trump has no easy options for ending the war, and peace negotiations are at a nascent stage.”
March 24 – Axios (Barak Ravid and Marc Caputo): “Iranian officials have told the countries trying to mediate peace talks with the U.S. that they have now been tricked twice by President Trump and ‘we don’t want to be fooled again,’ according to a source with direct knowledge… But during the two previous rounds of U.S.-Iran talks, Trump green lit crippling surprise attacks while still claiming to be seeking a deal… Iranian officials have told the mediators — Pakistan, Egypt and Turkey — that U.S. military movements and Trump’s decision to deploy major troop reinforcements have increased their suspicion that his proposal for peace talks is just a ruse. To the Trump administration, the massing of forces is a sign he’s serious about negotiating from gunboats, not that he’s negotiating in bad faith. ‘Trump has a hand open for a deal and the other is a fist, waiting to punch you in the f***ing face,’ said a Trump adviser.”
March 25 – Bloomberg (Golnar Motevalli): “As US President Donald Trump doubles down on his claim that he’s negotiating with Iran to end the war in the Persian Gulf, a conservative politician of the Islamic Republic has emerged as his most likely counterpart. Mohammad-Bagher Ghalibaf is Iran’s speaker of parliament, a former mayor of Tehran and an ex-commander of the Islamic Revolutionary Guard Corps. Known for his hardline approach to dissent, he’s emerged as one of the most powerful figures in Iran’s wartime leadership structure. Ghalibaf’s past and comments since the war began suggest he’s unlikely to cave in to any demands from the US. He’s a staunch defender of the theocratic system that’s ruled Iran for almost 50 years and, in recent days, he’s implied Iran is winning the conflict by causing chaos in global energy markets, piling economic pressure on Trump.”
March 25 – Financial Times (Najmeh Bozorgmehr, Humza Jilani, Andrew England, Abigail Hauslohner, and John Paul Rathbone): “Iran’s top military leadership has scornfully dismissed Donald Trump’s claims that the Islamic republic was ready to make a deal after Washington presented Tehran with a 15-point plan to end the war. ‘Our first and last word has always been, is, and will be this: someone like us will never come to terms with someone like you — not now, not ever,’ the Khatam al-Anbiya Central Headquarters, Iran’s military command, said in a video message... ‘Do not call your defeat an agreement. The era of your promises has come to an end.’ The statement reflected deep scepticism in Iran that the US president is serious about a deal, along with the Islamic regime’s belief that it has the upper hand despite the destruction caused by thousands of US and Israeli strikes.”
March 25 – Axios (Zachary Basu): “An epidemic of suspicious trading has emerged around President Trump’s most consequential decisions — each time, just minutes or hours before he rattles global markets, according to exchange data. As the Iran war sends prices soaring for ordinary Americans, a select few appear to be profiting in plain sight. It’s precisely the kind of alleged corruption Trump built his political career railing against… The pattern has become impossible to ignore, spanning both traditional financial markets and fast-growing prediction platforms. On Monday, $580 million in oil futures flooded the market in a sudden spike — with no public news to explain it — roughly 16 minutes before Trump announced a pause in strikes on Iranian power plants. On the Friday before the war began, an unusual surge of more than 150 Polymarket accounts placed hundreds of bets predicting a U.S. strike on Iran by the next day…”
March 24 – Bloomberg (Yongchang Chin, Dan Murtaugh, and Jan-Patrick Barnert): “Futures for oil and stocks worth billions of dollars changed hands just 15 minutes before a social media post from US President Donald Trump sent crude prices tumbling and equities soaring. Contracts corresponding to at least 6 million barrels of Brent and West Texas Intermediate were sold in the two minutes from 6:49 a.m. in New York on Monday… The average for the same time period over the previous five trading days was about 700 lots — or 700,000 barrels. Trump’s Truth Social post was published at around 7:05 a.m. A similar increase in activity in US stock futures was observed on the S&P 500 with about 6,000 contracts traded, representing more than $2 billion in notional value.”
March 26 – Bloomberg (Jennifer A Dlouhy and Skylar Woodhouse): “Treasury Secretary Scott Bessent said a US insurance program meant to boost shipping through the Strait of Hormuz will begin soon… ‘The oil market is well-supplied. We’ve taken actions to ensure that oil supplies stranded at sea are made available to the global market,’ Bessent said. ‘Your bold actions, like the Development Finance Corporation’s maritime reinsurance program, in conjunction with Central Command, will soon provide shippers through the Gulf region with a level of security we have never seen before’.”
March 25 – Associated Press (Michael Kunzelman and Christopher Rugaber): “The Justice Department’s investigation of a $2.5 billion renovation project at the Federal Reserve didn’t find any evidence of a crime, a federal prosecutor privately conceded under questioning by a skeptical judge earlier this month… That admission by Assistant U.S. Attorney Andrew Massucco came during a March 3 hearing that was closed to the public… Eight days later, Chief Judge James Boasberg quashed government subpoenas issued to the Federal Reserve, dealing a severe blow to the government’s investigation. In his March 11 ruling, Boasberg said the government had produced ‘essentially zero evidence’ to suspect Fed Chair Jerome Powell of a crime.”
March 24 – Bloomberg (Enda Curran): “Treasury Secretary Scott Bessent regularly says his motivation to get ‘out from behind my desk’ and enter public service was concern about growing US debt. Developments over the past several weeks have left those alarms ringing even louder. First came the Supreme Court’s ruling against President Donald Trump’s sweeping tariffs — a significant source of revenue for the federal government… Then Trump’s war on Iran drove up the government’s spending needs and clouded the outlook for growth, raising risks for revenue flows. The Pentagon has already asked for an additional $200 billion to finance the conflict.”
March 22 – Bloomberg (Tony Czuczka): “A senior Cuban official said the country is preparing for a possible military assault as President Donald Trump increases economic pressure on the government in Havana… ‘Our military is always prepared,’ Deputy Foreign Minister Carlos Fernandez de Cossio said… ‘And in fact it is preparing these days for the possibility of military aggression. We would be naive if, looking at what’s happening around the world, we would not do that. But we truly hope that it doesn’t occur’.”
March 24 – Bloomberg (Eric Roston and Lorelei Smillie): “Kate Marvel, a high-profile NASA climate scientist, resigned from the space agency’s Earth research division Tuesday, citing in a resignation letter the Trump administration’s attacks on science and ‘upheavals of the past year.’ ‘I never expected that science itself would come under attack, simply because it — like journalism, history, and even the best kind of art — is a way of seeking truth,’ she wrote in the letter… addressed to Gavin Schmidt, director of NASA’s Goddard Institute of Space Studies, and Ron Miller, the institute’s deputy director.”
Constitution Watch:
March 26 – Wall Street Journal (Heather Somerville): “A U.S. federal judge… halted the Trump administration’s designation of Anthropic as a supply-chain risk, issuing a ruling that the government trampled free-speech protections when it classified the artificial-intelligence company as a security threat and barred government use of its models. Judge Rita F. Lin of the Northern District of California… ordered the Trump administration to desist from applying the president’s directive that federal agencies stop using Anthropic’s technology, and from implementing its designation of the company as a risk to the national security supply chain.”
Budget Watch:
March 22 – Axios (Neil Irwin): “The United States faces a dire and unsustainable fiscal outlook. You’d never know it from the action in Washington. Across parties and policy areas, you’d never guess that the U.S. faces fiscal constraints created by its high-and-rising public debt, ballooning deficits without precedent in times of prosperity, and a looming entitlement spending crisis… The Trump administration is seeking $200 billion to fund the Iran war and replenish depleted weaponry. The Supreme Court struck down the administration's use of emergency authority to impose tariffs… For all the attention on DOGE one year ago, there has been little evidence of lasting restraint of federal spending. Caps on discretionary spending for the 2024 and 2025 fiscal years, part of a spending deal in 2023, weren’t extended. That all follows tax legislation enacted last year that the Congressional Budget Office scored as increasing cumulative deficits by $3.4 trillion over a decade…”
March 25 – Reuters (Susan Heavey and Abhinav Parmar): “The Pentagon said… it had reached framework agreements with BAE Systems, Lockheed and Honeywell to boost production of defense systems munitions as part of a push to put the U.S. military on a ‘wartime footing’.”
Trade War Watch:
March 27 – Wall Street Journal (Hannah Miao): “China on Friday opened two probes into U.S. trade practices, keeping pressure on Washington ahead of President Trump’s visit to Beijing in May. The Chinese probes mirror new investigations by the U.S. that could raise tariffs on Chinese goods. A summit between Trump and Chinese leader Xi Jinping is scheduled for May 14-15 in Beijing. ‘Both sides are building up maximum leverage before the meeting,’ said Dan Wang, a China director at consulting firm Eurasia Group.”
March 23 – Bloomberg (Jorge Valero and Oliver Crook): “US Ambassador to the European Union Andrew Puzder warned the bloc should expect more tariffs if it doesn’t approve a stalled trade deal with Washington. ‘If the trade deal goes away, you guys get hit with the increased tariffs, and for us, nothing changes,’ Puzder told Bloomberg…”
New World Order Watch:
March 25 – Politico (Victor Jack, Chris Lunday and Esther Webber): “Donald Trump’s messaging on what he wants from American allies in his war against Iran is so confusing that any effort to help in reopening the Strait of Hormuz remains deadlocked, according to four European government officials. Washington has not made any formal requests for equipment, said the officials… More than 30 nations, including a majority of NATO countries, have pledged ‘appropriate efforts’ to restart shipping through the critical trade chokepoint after the U.S. president slammed allies as ‘COWARDS’ for failing to volunteer their assistance.”
March 21 – Financial Times (Joe Leahy and William Langley): “China sought to woo global chief executives including Apple’s Tim Cook, UBS’s Sergio Ermotti and HSBC’s Georges Elhedery in Beijing on Sunday, touting the country’s safety and reliability in stark contrast to a US bogged down in war with Iran. Premier Li Qiang told more than 70 chief executives gathered… for the government’s annual Davos-style forum that the world’s second-largest economy offered an unmatched supply chain and a predictable commercial environment. The country was committed to being a ‘cornerstone of certainty’ and a ‘harbour of stability’ in the face of rising trade protectionism and upheaval in the rules-based international order, said Li.”
March 24 – South China Morning Post (Ralph Jennings,Mia Nurmamat): “China has cut exports of two metals used in military technology to Japan while increasing shipments of rare earth magnets, in what could signal a muted warning after geopolitical tensions between the two Asian economies flared last year. Exports of gallium to Japan registered zero volume in the first two months of the year, compared with 8,007kg in the same period of 2025… Germanium exports were also at zero in January and February, compared with 400kg a year earlier.”
Ukraine Watch:
March 23 – Politico (Nicholas Vinocur): “The biggest fear of European leaders is that Donald Trump’s war in Iran will lead him to abandon Ukraine. Governments are terrified that the U.S. president could retaliate against America’s European allies for spurning his appeals for assistance in the Middle East, primarily by cutting off what’s left of U.S. help for Kyiv, according to four EU diplomats… As they scramble to avoid a permanent break in the transatlantic relationship, leaders hope their offer of limited support for his action against Tehran will suffice to convince Trump to stay the course in the conflict with Russia. The war in Iran ‘must not divert our attention from the support we give Ukraine,’ French President Emmanuel Macron said…”
March 26 – Associated Press (Barry Hatton): “The Iran war has deflected global attention from Russia’s all-out invasion of its neighbor Ukraine as Europe’s biggest conflict since World War II enters its fifth year and an emboldened Kremlin undertakes a spring offensive. The past week showed that neither side is easing up. Russia on Tuesday fired almost 1,000 drones and 34 missiles at Ukraine in one of the war’s biggest bombardments. The following day Ukraine launched almost 400 drones in the largest reported overnight attack on Russian regions and Crimea. Ukraine’s fate is still Europe’s top foreign policy issue, fueled by fears that Moscow has wider ambitions.”
U.S./Russia/China/Europe/Iran Watch:
March 26 – Bloomberg (Andrea Palasciano, Max Ramsay, and Oliver Crook): “Russian intelligence is helping Iran target Americans and US allies, according to the European Union’s foreign affairs chief Kaja Kallas… Kallas called on the US to step up pressure on Moscow by supporting Ukraine’s effort to counter the Russian invasion. ‘We see that Russia is helping Iran with intelligence to target Americans, to kill Americans,’ Kallas told reporters. ‘Russia is also supporting Iran now with the drones so that they can attack neighboring countries and also US military bases’.”
March 26 – Reuters (Steve Holland and Alexandra Alper): “SMIC, China’s largest chipmaker, has sent chipmaking tools to Iran’s military, two senior Trump administration officials said…, raising questions about Beijing’s stance in the month-old U.S.-Israeli conflict with Iran. SMIC, which has been heavily sanctioned by the U.S. government over alleged ties to the Chinese military, began sending the tools to Iran roughly a year ago and ‘we have no reason to believe that any of this has stopped,’ one of the officials said.”
Taiwan Watch:
March 20 – Financial Times (Kathrin Hille): “Taiwan is concerned that the Iran war is depleting stocks of long-range cruise missiles that would be vital for the US to help defeat any Chinese invasion… The US is estimated to have fired hundreds of so-called Joint Air-to-Surface Standoff Missiles (JASSMs) during weeks of conflict in the Middle East, as well as ship-launched Tomahawk missiles. Defence experts said both would be crucial in any conflict over Taiwan because they can be fired from outside the range of an enemy’s air defences, diminishing the risk for an attacking aircraft or naval vessel.”
March 24 – Reuters (Ben Blanchard): “The United States has ‘quite a high’ sense of urgency in helping Taiwan strengthen its military capabilities and is working to help speed up delayed weapons deliveries, the island's Defence Minister Wellington Koo said… Taiwan, which faces a rising military threat from China, has complained of repeated delays to weapons ordered from the United States, the most important international backer and arms supplier to the island, which Beijing claims as its territory.”
AI Bubble/Arms Race Watch:
March 26 – Reuters (Eduardo Baptista): “Tightened supply of helium due to the Middle East conflict has started affecting some production in the global tech supply chains, leaving companies scrambling to secure alternative supplies, industry executives said. Helium is used in several key stages of chipmaking, including cooling, leak detection and precision manufacturing processes, and its prices have soared since the Middle East crisis began… ‘A helium shortage is an absolute concern,’ said Cameron Johnson, senior partner at supply chain consultancy Tidal Wave Solutions…”
March 26 – New York Times (Lydia DePillis): “The torrential wave of data center construction for artificial intelligence has seemed unstoppable. Unconstrained by interest rates or labor costs, the biggest tech companies in the world are pouring trillions of dollars into land, electronics and new power plants… But lately, zoning commissions and county councils across the country have been resisting. Unnerved by the data centers’ voracious electricity demands and sprawling footprints, they are denying permits and withdrawing tax breaks at a rate that is forcing companies like Google, Microsoft and Meta to take a different tack… ‘A lot of the commitments and the build-out of data centers where it’s easy has kind of been done, so you’re getting marginally more difficult,’ said Todd Castagno, a managing director at Morgan Stanley. ‘From a markets perspective, expectations might be, maybe not reset, but realigned with the fact that it’s hard to put a couple trillion dollars in the ground in a short time’.”
Bubble Watch:
March 24 – Bloomberg (Alexandra Semenova): “For retail investors, the US stock market’s most reliable dip buyers in recent years, risks are starting to outweigh the rewards. The cohort on Monday notched its first day of net selling of single stocks since November 2023, dumping $20.6 million worth of shares, data from Vanda Research show.”
March 25 – Bloomberg (Nino Paoli): “Average Wall Street bonuses jumped to a record last year, with the total pool for payouts rising to $49.2 billion as profits and revenues soared. The average annual bonus rose 6%, to $246,900, according to… New York State Comptroller Thomas DiNapoli… The total pool is the largest in records going back to 1987… The figure marked a second consecutive year of record-breaking bonuses for securities industry workers… Bankers entered 2026 after a windfall last year that included an upswing in dealmaking and a record $134 billion of trading revenue.”
March 26 – Wall Street Journal (Nicole Friedman and Veronica Dagher): “The mortgage-finance giant Fannie Mae will soon accept so-called crypto-backed mortgages for the first time, the latest expansion of cryptocurrencies into mainstream financial transactions. The mortgage company Better Home & Finance and the U.S. crypto exchange Coinbase Global unveiled a new mortgage product Thursday that allows home buyers to pledge their crypto holdings when getting a Fannie-backed mortgage, instead of selling the crypto to make a cash down payment.”
Inflation Watch:
March 26 – Bloomberg (William Horobin): “The conflict in the Middle East is reviving the specter of inflation and hobbling the global economy just as it was showing signs of strengthening at the start of the year, the OECD said. In its updated…, the… organization sharply increased its inflation forecasts for major economies and now sees the average rate for the Group of 20 this year jumping to 4% — with an even higher pace in the US — rather than the 2.8% it predicted in December… ‘The breadth and duration of the conflict are very uncertain, but a prolonged period of higher energy prices will add markedly to business costs and raise consumer price inflation, with adverse consequences for growth,’ the OECD said.”
March 26 – Financial Times (Susannah Savage): “US farmers are being hit by an ‘unbearable’ surge in fertiliser and fuel costs driven by the Iran conflict as President Donald Trump prepares to meet with groups from the critical political constituency on Friday. Disruption to fertiliser production in the Middle East and shipments through the Strait of Hormuz — a route for roughly a third of global seaborne supply — has pushed up prices by more than 40%, as the US enters its spring planting period when most farmers use the bulk of their fertiliser. ‘The timing on this conflict is… the worst time you could imagine,’ said Eric Mayberry, president of the Tennessee Farm Bureau. ‘We’re struggling to pencil out a profit… and increased fertiliser and fuel costs just make that problem even worse,’ he said. ‘It’s almost unbearable.’ ‘If the conflict rages on for extended period of time, we may not be able to get enough fertiliser to finish out the growing season,’ he said. ‘That’s very distressing… if we can’t get fertiliser, there’s not much point in planting’.”
March 25 – Bloomberg (K Oanh Ha): “Travelers hoping for a return to more moderate long-haul airfares this summer are in for a rude awakening. Ticket prices on major routes connecting Asia and Europe have surged up to 560% this month and are likely to stay elevated through the summer and into fall…, according to Alton Aviation Consultancy. For June travel, fares across seven popular Asia-Pacific to Europe routes are averaging about 70% higher than a year ago… A Sydney-to-London ticket now averages more than $1,500, roughly double last year’s price… There’s little relief in sight. Prices are expected to remain about 30% above last year’s levels even as far out as October.”
March 26 – Reuters (Pooja Menon and Pranav Mathur): “Disruptions to oil and petrochemical flows through the Strait of Hormuz following the outbreak of the Iran war have tightened global chemicals supply and lifted prices of plastics and polymer, used in everything from auto parts to toys, to roughly four-year highs. About $20 billion to $25 billion worth of petrochemical products pass through the Strait annually, according to Rabobank… ‘Anyone who imports from the Middle East, which is pretty much everyone in the rest of the world to a certain extent, has lost a large supplier and is having to scramble to find replacement resin at extraordinarily higher prices,’ said Joel Morales of Chemical Market Analytics by OPIS. The Middle East accounted for over 40% of polyethylene exports in 2025, led by Saudi Arabia… Prices for plastics such as polyethylene (PE) and polypropylene (PP) have surged since the Middle East conflict began, tracking higher crude and feedstock costs. ‘Global logistics have become uncertain, with up to 50% of polyethylene supply either offline, constrained or being impacted following the events in the Middle East,’ said Dow CEO Jim Fitterling.”
March 26 – Reuters (Hyunjoo Jin, Daewoung Kim and Sophie Yu): “From beer and crisps to noodles, toys and cosmetics, companies - and consumers - across Asia are bracing for a crisis as the Iran war wreaks havoc on supply chains, plastics and oil supplies, upending everyday life and sending prices soaring. For many, it is already crunch time. Choi Gun-soo, the manager of a 57-year-old South Korean factory that makes plastic films used by farmers to cover crops as well as by television manufacturers, said his suppliers were raising prices of some raw materials as much as 50%, while other suppliers had simply run out of stock.”
March 25 – Bloomberg (Vince Golle): “The cost of imports into the US jumped in February by the most in nearly four years, reflecting a broad pickup in prices even before war in the Middle East. Import prices increased 1.3% from the prior month…, boosted in part by higher prices for petroleum and natural gas. Excluding petroleum, import costs advanced 1.2%, the most since January 2022 and driven by a record monthly increase in capital goods costs as well as a pickup in prices of consumer merchandise excluding automobiles.”
March 25 – CNBC (Dan Mangan): “The U.S. Postal Service… said it is seeking to impose a temporary 8% fuel surcharge for package and express mail deliveries to deal with rising transportation costs, which include higher oil prices as a result of the Iran war… The 8% surcharge would apply to postage on Priority Mail Express, Priority Mail, USPS Ground Advantage, and Parcel Select products.”
Federal Reserve Watch:
March 22 – Bloomberg (Enda Curran): “Federal Reserve Chair Jerome Powell… lauded the policy record of the late Fed Chair Paul Volcker, who raised interest rates and sparked a recession to tame the high inflation that took off during the 1970s. In…remarks to the American Society for Public Administration’s annual conference — which honored Powell with the Paul Volcker Public Integrity Award — the Fed chair credited his predecessor for acting with courage and integrity while in office. ‘Paul Volcker set an example that all public servants should emulate. His actions remind us that independence and integrity are inseparable — we need independence to do what is right, and we need integrity to use that independence wisely,’ Powell said. ‘Ultimately, each of us will want to look back at the arc of our lives and know that we did what was the right thing’.”
March 22 – Wall Street Journal (Nick Timiraos): “Kevin Warsh is facing one of the most awkward Federal Reserve leadership transitions in decades. The economy has grown more complicated than when he promised interest-rate cuts last year while campaigning for President Trump to nominate him for the job. Even before the war in Iran sent energy prices higher, the Fed’s preferred inflation measure was heading in the wrong direction. The war threatens to push inflation higher still in the coming months, and investors now view rate increases to be more likely than cuts this year. The confirmation process, meanwhile, has stalled, making it hard to say whether Warsh will take over when Fed Chair Jerome Powell’s term ends in two months. That means Warsh could ultimately arrive at a Fed under pressure from a president demanding lower rates and colleagues skeptical of cuts—all while Powell has signaled he may not leave.”
March 26 – Yahoo Finance (Jennifer Schonberger): “Federal Reserve Vice Chair of Supervision Philip Jefferson said… he expects the war in Iran will push up inflation in the near term and that interest rates are ‘well-positioned’ to respond to a range of economic outcomes. ‘At least in the short term, I expect overall inflation to move higher, reflecting a rise in energy prices stemming from the conflict in the Middle East,’ Jefferson said…”
March 26 – Reuters (Dan Burns): “Federal Reserve Governor Lisa Cook said… the war in Iran has shifted the balance of risks for the central bank's dual mandate of price stability and full employment more toward inflation. ‘I see the balance of risks as being largely, on net, in balance, but I would argue that the inflation risk is greater right now as a result of the Iran war,’ Cook said…”
March 23 – Bloomberg (Maria Eloisa Capurro): “Federal Reserve Bank of Chicago President Austan Goolsbee said he could envision the US central bank needing to raise interest rates, or returning to rate cuts, depending on how the war in the Middle East plays out. ‘We could be back to the environment with multiple rate cuts for the year if inflation behaves,’ Goolsbee said… ‘I could see circumstances where we would need to raise rates if it was going a different way, and inflation was getting out of control’.”
March 26 – Reuters (Howard Schneider): “A price shock from higher oil prices could trigger rising inflation expectations that the U.S. Federal Reserve needs to guard against, Fed Governor Michael Barr said… If the Iran conflict ‘continues for some time, the spike in energy prices and other commodities could have broader implications for both prices and economic activity,’ Barr said… ‘We have had five years now of inflation at elevated levels, and near-term inflation expectations have risen again, so I am particularly concerned that yet another price shock could increase longer-term inflation expectations… We need to be especially vigilant,’ Barr said.”
March 26 – Wall Street Journal (Matt Grossman): “The Federal Reserve is on track to significantly reduce its monthly purchases of government bonds after mid-April, according to Fed markets official Roberto Perli… Perli, a New York Fed official who manages the Fed system’s presence in financial markets, reiterated previous Fed guidance that the volume of Treasury securities bought monthly by the Fed is likely to decline after the U.S. income-tax season ends... ‘The monthly pace can likely be significantly reduced after April 15,’ Perli said… ‘To account for uncertainty and other factors, that reduction may be somewhat gradual’.”
March 26 – Financial Times (Claire Jones and Ian Hodgson): “A top Federal Reserve official has claimed the US central bank could eventually shrink its bloated $7tn balance sheet by up to $2tn, without roiling financial markets. Stephen Miran, a Fed governor…, said measures such as easing liquidity regulations and destigmatising the use of some of the central bank’s lending operations could pave the way for ‘$1tn to $2tn of balance sheet reduction’. Miran added his ideas would need to be ‘studied and calibrated’, with the implementation process taking ‘several years’.”
U.S. Economic Bubble Watch:
March 25 – Reuters (Lucia Mutikani): “The U.S. current account deficit narrowed sharply in the fourth quarter, hitting the lowest level in nearly five years, amid a rise in primary income and a reduction in the goods trade deficit partly because of tariffs on imports. The… current account deficit, which measures the flow of goods, services and investments into and out of the country, contracted by $48.4 billion, or 20.2%, to $190.7 billion last quarter.”
March 26 – Associated Press (Matt Ott): “The number of Americans applying for jobless aid inched up last week as employers continue to retain workers despite a labor market that has weakened considerably in the past year. U.S. applications for jobless aid for the week ending March 21 rose by 5,000 to 210,000 from the previous week’s 205,000… That’s right in line with the 210,000 new filings analysts… were expecting… The total number of Americans filing for unemployment benefits for the previous week ending March 14 fell by 32,000 to 1.82 million… That’s the lowest number of continuing claims since May 25, 2024…”
March 24 – Axios (Emily Peck): “Workers, especially those with a college degree, think the job market is awful, a new Gallup analysis… finds… Although the unemployment rate is relatively low at the moment, hiring has slowed a lot, particularly for professionals. Deteriorating worker sentiment can signal that things are about to get much worse. ‘Workers with higher levels of formal education were markedly less optimistic about the job market in 2025 than those with less schooling,’ writes Sarah Fioroni, a senior research consultant at Gallup.”
March 26 - Associated Press (Alex Veiga): “The average long-term U.S. mortgage rate climbed this week to its highest level in more than six months… The benchmark 30-year fixed rate mortgage rate rose to 6.38% from 6.22% last week… One year ago, the rate averaged 6.65%. This marks the largest one-week increase since April 2025 and the largest three-week increase since October 2024…”
China Watch:
March 24 – Bloomberg: “China Vanke Co.’s stake in a logistics firm that’s facing mounting investor concerns is adding to the strain on the distressed developer, just as another wave of looming debt maturities stokes default risks again. Vanke holds a 21% stake in Singapore-based GLP Pte., which saw its bond prices sink to distressed levels last week.”
Central Banker Watch:
March 25 – Wall Street Journal (Paul Hannon): “The European Central Bank would have to respond forcefully if inflation threatened to rise significantly above its target for a long time as a consequence of the conflict in the Middle East, President Christine Lagarde said… However, the policymaker said the key rate wouldn’t be lifted until there is ‘sufficient’ information available to judge the likely impact of the conflict. ‘If we expect inflation to deviate significantly and persistently from target, the response must be appropriately forceful or persistent,’ she said…”
March 25 – Associated Press (David McHugh): “The head of the European Central Bank says that businesses may be quicker to raise prices in response to the oil shock from the Iran war due to bitter memories of the inflation spike after Russia’s invasion of Ukraine in 2022. If oil and gas prices continue to rise, ‘the response of firms and workers may be faster than last time,’ ECB President Christine Lagarde said… ‘We have a more recent memory of high inflation, which could affect how quickly costs are passed on and compensation is sought,’ Lagarde said… ‘An entire generation has now lived through its first episode of high inflation — and it may not be as slow to react a second time’.”
Europe Watch:
March 25 – Bloomberg (Priscila Azevedo Rocha): “Europe is about to start the gas stockpiling season with key storage tanks depleted, meaning it will need to compete even more with Asian buyers to secure supplies, just as the Middle East conflict disrupts energy flows. Dutch facilities are now just about 6% full, the lowest for this time of year in data going to late 2010… In Germany, home to the region’s biggest sites, inventories are also much lower than usual, at about 22%...”
Japan Watch:
March 24 – Bloomberg (Yoshiaki Nohara and Akemi Terukina): “Japanese Prime Minister Sanae Takaichi looked to ramp up the nation’s response to the fallout from the war in Iran with a thorough review of the ecosystem of oil-related products, as the likelihood builds of shortages and knock-on effects across the economy. The Finance Ministry is also sounding out market participants on possible intervention in the crude oil futures market… in an apparent attempt to ease pressure on the commodity and currency stemming from the crisis.”
March 22 – Wall Street Journal (Megumi Fujikawa): “Japanese companies are poised to give workers their most significant pay raise in 35 years… Preliminary data from the nation’s largest labor union group, known as Rengo, showed that 1,100 members secured wage increases of 5.26% on average this year. The figure was slightly higher than last year’s 5.25% gain and would mark the steepest climb since 1991.”
Emerging Market Watch:
March 25 – New York Times (Alex TravelliChoe Sang-HunSui-Lee Wee and Jason Gutierrez): “Across Asia, countries already vulnerable to the sustained disruption in energy supplies from the Persian Gulf are also contending with an ominous side effect. Their currencies are being suffocated by a dollar that is surging in value… The fighting has revealed a second painful choke point. About 90% of international trade in goods — including the oil and gas that are skyrocketing in price — uses the American currency. And as often happens in times of global turmoil, investors are taking money out of riskier regions and putting more money into U.S. assets.”
March 22 – Bloomberg (Zijia Song and Vinicius Andrade): “Once a top pick among emerging-market investors, local-currency debt has become a losing trade. After months being boosted by a weaker dollar, slowing inflation and interest-rate cuts, the bonds have delivered a loss of more than 5% since the Iran war started... Just six of the 22 main emerging-market currencies are up against the dollar this year, compared with 17 before the conflict broke out.”
March 24 – Bloomberg (Gonzalo Soto and Alex Vasquez): “Mexico’s annual inflation accelerated much more than expected in early March… Inflation quickened to 4.63% in the first two weeks of March compared to the same period last year… The reading was… well over late February’s 4.13% print.”
March 24 – Bloomberg (Martha Viotti Beck): “Brazil’s central bank warned that inflation risks intensified after war in the Middle East broke out and said future steps in its easing cycle will be determined as new information is incorporated… ‘The risks to the inflation scenarios, both to the upside and to the downside, which were already higher than usual, intensified after the beginning of the Middle East conflicts,’ they said…”
March 25 – Bloomberg (Andy Mukherjee): “India’s largest private-sector lender, HDFC Bank Ltd., is scrambling to respond to investors’ concerns that highlight the extent to which some of the country’s most esteemed firms have lost precious cachet — and, occasionally, the market’s faith. Chairman Atanu Chakraborty resigned March 18, citing ‘certain happenings and practices’ at the bank that are ‘not in congruence with my personal Values and Ethics.’ He later told a TV interviewer that he didn’t depart due to wrongdoing at the lender.”
Social, Political, Environmental, Cybersecurity Instability Watch:
March 25 – Associated Press (Tammy Webber): “Oil depots spewing black smoke. Debris sinking in the Persian Gulf. Missiles pounding military sites. The Iran war has unleashed a toxic mix of chemicals, heavy metals and other pollutants that threaten everything from agriculture to drinking water to people’s health — and will leave behind environmental damage and health risks that could persist for decades, experts said. ‘All the burning of oil and gas fields in the coastal areas, all the ships that are there, the oil tankers that are being burned or (sunk) — all of these mean pollution,’ said Kaveh Madani, an Iranian scientist and director of the United Nations University Institute for Water, Environment and Health.”
March 24 – Associated Press (Seth Borenstein): “After smashing March heat records in 14 states and the U.S. as a whole, the gigantic heat dome that’s baked the Southwest is creeping eastward and may end up being one of the most expansive heat waves in American history, meteorologists and weather historians said. And it’s not going away for awhile, maybe not till the middle of the next week as April starts, said meteorologist Gregg Gallina of the National Weather Service’s Weather Prediction Center. ‘Basically the entire U.S. is going to be hot,’ Gallina said... ‘The area of record temperatures is extremely large. That’s the thing that’s really bizarre.’ This heat dome — in which high pressure is acting like a pot lid trapping hot air over a region — will leave Flagstaff, Arizona, with 11 or 12 straight days of temperatures higher than the city’s previous March record…”
March 24 – Bloomberg (Alastair Marsh): “JPMorgan… says aging, run-down grid infrastructure now risks undermining security goals, with everything from extreme weather to cyberattacks posing a growing threat. The Wall Street bank… describes the current decades-old grid network as a ‘national security risk.’ Against that backdrop, investments that make grid infrastructure more resilient are becoming ‘increasingly attractive,’ according to JPMorgan.”
March 23 – Bloomberg (Aaron Clark): “Global air quality declined in 2025, with more cities reporting standards below international health guidelines on the impact of severe wildfires and pollution from sectors including fossil fuels and agriculture. Data from almost 9,500 cities showed 14% met World Health Organization standards for annual average concentrations of harmful fine-particle matter, or PM2.5, according to… IQAir Group. That compared to a total of 17% a year earlier when nearly 9,000 cities were surveyed.”
March 26 – Bloomberg (Brian Kahn and Eric Roston): “Sea ice in the Arctic has tied last year’s record for its lowest-ever winter coverage. The findings, published… by the US National Snow and Ice Data Center, add to the clear signals that the Arctic is undergoing a rapid shift as the fastest-warming part of the world. Last year, sea ice topped out at roughly 14.3 million square kilometers. That represented a loss of 2.3 million square kilometers of ice… compared to 1979… This year the winter ice reached its high point on March 14, at a level that’s virtually indistinguishable from the year before.”
March 22 – Financial Times (Emiliya Mychasuk): “The Earth’s energy imbalance reached record levels last year, as the rate of solar radiation that entered the planet exceeded the amount leaving the system at a faster rate, the World Meteorological Organization said. The measure was included for the first time in the UN agency’s State of the Climate annual report, as the rate had more than doubled in the past 20 years while greenhouse gases continued to accumulate.”
The S&P500 slumped 2.1% (down 7.0% y-t-d), and the Dow declined 0.9% (down 6.0%). The Utilities rallied 3.0% (up 7.5%). The Banks slipped 0.5% (down 9.4%), and the Broker/Dealers dipped 0.5% (down 6.4%). The Transports gained 1.8% (up 4.7%). The S&P 400 Midcaps increased 0.4% (up 0.2%), and the small cap Russell 2000 gained 0.5% (down 1.3%). The Nasdaq100 dropped 3.2% (down 8.4%). The Semiconductors slumped 2.8% (up 5.3%). The Biotechs slipped 0.3% (down 7.5%). With bullion increasing $2, the HUI gold index rallied 7.1% (up 4.3%).
Three-month Treasury bill rates ended the week at 3.5976%. Two-year government yields added a basis point to 3.91% (up 44bps y-t-d). Five-year T-note yields rose six bps to 4.07% (up 34bps). Ten-year Treasury yields gained five bps to 4.43% (up 26bps). Long bond yields added three bps to 4.97% (up 13bps). Benchmark Fannie Mae MBS yields jumped seven bps to 5.54% (up 50bps).
Italian 10-year yields surged another nine bps to 4.05% (up 50bps y-t-d). Greek 10-year yields gained five bps to 3.99% (up 55bps). Spain's 10-year yields added five bps to 3.63% (up 34bps). German bund yields rose five bps to 3.09% (up 24bps). French yields rose eight bps to 3.83% (up 27bps). The French to German 10-year bond spread widened about three to 74 bps. U.K. 10-year gilt yields slipped two bps to 4.97% (up 50bps). U.K.’s FTSE equities index recovered 0.5% (up 0.3% y-t-d).
Japan’s Nikkei 225 Equities Index was unchanged (up 6.0% y-t-d). Japan’s 10-year “JGB” yields jumped 11 bps to 2.39% (up 32bps y-t-d). France’s CAC40 recovered 0.5% (down 5.5%). The German DAX equities index declined 0.4% (down 8.9%). Spain’s IBEX 35 equities index recovered 0.5% (down 2.9%). Italy’s FTSE MIB index rallied 1.3% (down 3.5%). EM equities were mixed. Brazil’s Bovespa index rallied 3.0% (up 12.7%), and Mexico’s Bolsa index jumped 4.0% (up 3.6%). South Korea’s Kospi sank 5.9% (up 29.1%). India’s Sensex equities index fell 1.3% (down 13.7%). China’s Shanghai Exchange Index declined 1.1% (down 1.4%). Turkey’s Borsa Istanbul National 100 index dropped 2.7% (up 12.8%).
Federal Reserve Credit increased $10.6 billion last week to $6.614 TN, with a 15-week expansion of $123 billion. Fed Credit was down $2.276 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.887 TN, or 77%. Fed Credit inflated $3.803 TN, or 135%, since November 7, 2012 (698 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt dropped another $16 billion last week to $3.009 TN - the low back to January 2012. “Custody holdings” were down $288 billion y-o-y, or 8.7%.
Total money market fund assets (MMFA) dropped $53 billion to $7.803 TN - with a 38-week surge of $781 billion, or 15.2% annualized. MMFA were up $789 billion, or 11.3%, y-o-y - having ballooned a historic $3.182 TN, or 69%, since October 26, 2022.
Total Commercial Paper sank $32.8 billion to $1.363 TN. CP contracted $29 billion, or 2.1%, y-o-y.
Freddie Mac 30-year fixed mortgage rates jumped 16 bps to 6.38% (down 27bps y-o-y). Fifteen-year rates surged 21 bps to 5.75% (down 14bps). Bankrate’s survey of jumbo mortgage borrowing costs had the 30-year fixed rate up nine bps to 6.50% (down 29bps).
Currency Watch:
For the week, the U.S. Dollar Index increased 0.5% to 100.193 (up 1.9% y-t-d). On the upside, the Brazilian real increased 1.5%. On the downside, the Australian dollar declined 2.1%, the Norwegian krone 1.9%, the New Zealand dollar 1.5%, the Swedish krona 1.4%, the Swiss franc 1.4%, the Canadian dollar 1.2%, the Mexican peso 1.2%, the Japanese yen 0.7%, the British pound 0.6%, the euro 0.5%, the South African rand 0.5%, the Singapore dollar 0.5%, and the South Korean won 0.4%. China's (offshore) renminbi slipped 0.11% versus the dollar (up 1.11% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index was little changed (up 22.3% y-t-d). Spot Gold was about unchanged at $4,494 (up 4.0%). Silver recovered 2.7% to $69.7617 (down 2.7%). WTI Crude added $1.41, or 1.4%, to $99.64 (up 74%). Gasoline slipped 1.1% (up 90%), while Natural Gas declined 2.3% to $3.025 (down 18%). Copper rallied 2.2% (down 3%). Wheat gained 1.6% (up 19%), while Corn slipped 0.8% (up 5%). Bitcoin sank $4,600, or 6.5%, to $65,940 (down 24.8%).
Market Instability Watch:
March 26 – Financial Times (Kate Duguid and Ian Smith): “The $30tn US Treasury market is showing growing signs of strain, as turmoil in the Middle East drives swings in bonds that underpin the financial system. The ease of trading in the world’s biggest and most important financial market has deteriorated in recent weeks, even as dealing remains fluid, according to Wall Street banks and investors… Liquidity, the ease with which traders can buy or sell, ‘in rates and macro products has deteriorated over the last month’, added Matthew Scott, head of core fixed income and multi-asset trading at AllianceBernstein. JPMorgan… similarly noted this week that the size of trades required to move prices, known as ‘market depth’, has fallen by nearly as much as it did following Trump’s liberation day announcement.”
March 23 – Bloomberg (Finbarr Flynn and Ruth Carson): “The specter of stagflation caused by the Iran war has wiped out more than $2.5 trillion from the value of global bonds in March, on track for the biggest monthly loss in more than three years. Bonds are tumbling as a surge in oil prices quickens inflation, which erodes the value of the fixed payments from debt. While the slide in bonds’ market value is less than the roughly $11.5 trillion lost in global equities, it’s perhaps more unexpected as debt typically gains in times of geopolitical turmoil.”
March 26 – Wall Street Journal (Chelsey Dulaney): “The costs of shielding the global economy from the most severe energy shock in decades are adding up—just when governments can least afford it… The state of Georgia suspended its 33 cents-a-gallon gas tax, with other U.S. states considering doing the same. The U.K. government has promised to help pay some consumers’ heating-fuel bills. China, Hungary and Japan have limited prices at the gas pump. The efforts contain inflation but strain already-groaning government budgets…In Asia, the region most reliant on Middle Eastern energy, China, South Korea and Thailand have restricted fuel exports. Germany’s finance minister has proposed a windfall tax on energy companies… The world came into the war shackled with more than $100 trillion in public debt, limiting governments’ ability to spend aggressively the way they did in the pandemic and the 2022 energy crisis. Interest rates are far higher today…”
March 24 – Bloomberg (Alice Atkins): “The conflict in the Middle East has rattled markets around the world, but the gyrations have been especially pronounced in UK bonds, which are particularly vulnerable to jitters over inflation and strained government finances… Traders are betting that the Bank of England will raise rates by at least half a percentage point this year. It’s a grim backdrop for a country already contending with fragile finances and political challenges. The rise in borrowing costs is making it harder for the government to meet its fiscal targets…”
March 27 – Reuters (Libby George): “A record start to the year for emerging-market debt sales has largely ground to a halt as worries over the Iran war create havoc in the markets and push up borrowing costs, bankers and investors told Reuters, a situation that places a number of nations in limbo. The near-freeze underlines the precarious position for many emerging economies that until a month ago had enjoyed booming demand for their debt, defying tariffs and other geopolitical tumult.”
March 24 – Bloomberg (Edward Bolingbroke): “A rush by bond traders to unwind US futures positions amid the selloff triggered by war in Iran is running its course, setting the stage for new wagers that will determine whether the rout reverses or deepens. Just before hostilities broke out on Feb. 28, positions in US bond futures were heavily skewed toward lower rates… Those worries were abruptly replaced by inflation fears as the war sparked a surge in oil prices, prompting traders who were caught off guard to exit their positions, in turn accelerating the market decline.”
March 26 – Bloomberg (Alex Harris): “Recent activity in funding markets shows a quiet push by financial institutions to build up buffers that would help protect against any credit meltdowns or market distress, a sign they perceive rising risks even as overall conditions remain stable for now. A cluster of indicators — from increases Federal Home Loan Bank lending to shifts in money‑market fund allocations — all suggest that institutions, at the margins, are positioning themselves more defensively and are in some cases paying up to do so. Apollo Global Management Inc., through its insurance arm Athene, was the second‑largest borrower in the entire FHLB system last year, a sign private‑credit platforms are part of this move.”
March 25 – Bloomberg (Davide Barbuscia): “A New York Fed index… signaled that the US corporate bond market saw more dislocations in March, with the high-grade bond market more bruised than its high-yield counterpart. The Corporate Bond Market Distress Index, which the Federal Reserve of New York launched in 2022 to assess brewing risks in the US credit market, jumped earlier this month to the highest level since May 2025… ‘Credit market functioning deteriorated over the past month,’ the New York Fed said... ‘The investment-grade CMDI sector increased more than its high-yield counterpart’.”
March 23 – Bloomberg (Scott Carpenter): “Fannie Mae and Freddie Mac have begun placing sizable orders to purchase mortgage-backed securities, stepping into a market roiled by widening bond spreads and a surge in volatility, according to a person with direct knowledge… The government-controlled entities are moving to capitalize on a sharp selloff while expanding their already significant portfolios of bonds and loans… Their efforts follow a directive two months ago from President Donald Trump instructing the companies to acquire $200 billion of MBS as part of a push to drive down mortgage rates and bolster housing affordability.”
Leveraged Speculation Watch:
March 20 – Financial Times (Katie Martin): “The immense pressure of the war in Iran is poking out in some strange corners of the financial markets, such as Korean stocks and Romanian debt. Every asset class and commodity is taking some kind of strain. It is hard… to pick the market moves that really matter… A lot of very similar, very crowded bets among hedge funds, all anticipating further declines in interest rates, hit a wall as the abrupt rise in oil prices awoke inflation from what had appeared to be a nice nap.”
March 24 – Bloomberg (Caleb Mutua and Katherine Doherty): “Citadel Securities posted a record $12.2 billion in trading revenue last year, as the market-making arm of billionaire Ken Griffin’s empire continues in its bid to compete with the largest trading desks globally. The result marks a 25% increase from the previous full-year record of $9.7 billion in 2024… The company generated about $6.5 billion in earnings before interest, taxes, depreciation and amortization for 2025, also an increase on the prior year, the people said.”
U.S. Credit Trouble Watch:
March 24 – Bloomberg (Olivia Fishlow and Laura Benitez): “Two of the biggest names in private credit, Ares Management Corp. and Apollo Global Management Inc., blocked investors from getting even half of the money they wanted out of their funds, a sign of mounting strain in the $1.8 trillion market. The $10.7 billion Ares Strategic Income Fund limited withdrawals to 5% of shares after clients sought to redeem 11.6%... That followed the $15.1 billion business development company, Apollo Debt Solutions, which said Monday it was imposing the same cap after requests to pull 11.2%. Combined, the two firms’ caps mean that roughly $1.5 billion worth of redemptions will be blocked and remain invested in the funds.”
March 25 – Axios (Emily Peck): “It may be time to start listening to the private credit Cassandras. Private credit is now a multitrillion-dollar market, and the fallout from an upheaval in it could hit insurers, banks and even consumers. Just this week, two of the biggest players in the market — Apollo Global and Ares — said they were limiting the amount of money investors can withdraw from their funds to existing thresholds even as investors are clamoring to get their money back… Goldman Sachs analysts estimate that in a worst-case scenario for private credit loan defaults, losses could rise to about $105 billion. That would mean a cutback of 5-6% in new lending to the private sector. Sounds bad, but Goldman notes that there was a 55% pullback in the wake of the financial crisis.”
March 23 – Bloomberg (Ellen DiMauro, Olivia Fishlow, Rene Ismail, and Demetrios Pogkas): “Stephen Nesbitt was on no one’s list of Wall Street heavyweights when he bumped into a thirty-something salesman pitching the next big thing for wealthy investors: private credit. Nesbitt — who, as it happened, had written a book on private debt — took the idea and ran with it. Within a few years, he and his son Blake transformed their modest consulting business, Cliffwater LLC, into an unlikely giant. Their strategy: rather than sweat the details of every direct loan themselves, they’d piggyback on the firms that did. They’d also invest in industry heavyweights, creating something akin to a fund-of-private-credit-funds. Now the father-and-son team, who rode private credit on the way up, risk falling hard on the way down… Concerns center around the $33 billion Cliffwater Corporate Lending Fund, the largest of its kind in private credit.”
March 25 – Bloomberg (Davide Scigliuzzo): “A private credit fund managed by Ares Management Corp. posted its steepest monthly loss on record in February, providing further evidence of deteriorating performance in the $1.8 trillion private credit market. The Ares Strategic Income Fund, a non-traded business development company created in December 2022, lost 0.68% in February… February was the worst month for the broader leveraged loan market since September 2022. Including a small loss in January, the fund, which manages nearly $23 billion of assets, is down 0.7% so far this year.”
March 24 – Financial Times (Lee Harris and Robert Smith): “The US Securities and Exchange Commission has questioned whether Egan-Jones, the small credit rating provider that has come under fire for its grades on private credit loans, can ‘consistently produce credit ratings with integrity’. The regulator said an application by Egan-Jones to rate new classes of debt ‘raises questions about the adequacy of [Egan-Jones’] financial and managerial resources’ to produce the ratings. Questions over the adequacy of Egan-Jones’ resources also stemmed from ‘other non-public information available to the commission’, the SEC added.”
March 23 – Bloomberg (Caleb Mutua): “JPMorgan… is offering clients a new way to bet against the debt of five hyperscalers, as investors seek more-liquid hedges amid an unprecedented borrowing spree to finance artificial-intelligence infrastructure. The bank last month launched a basket of credit default swaps in Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Microsoft Corp. and Oracle Corp… Hedge funds and other investors can buy the basket to express a bearish or bullish view on the CDS, the people said. Citadel Securities started making markets in November for two baskets of corporate bonds issued by four of the hyperscalers in November.”
March 26 – Bloomberg (Casey He): “US states that have legalized sports betting have seen a rise in delinquency rates on consumer credit products and a decrease in credit scores, according to… the Federal Reserve Bank of New York. Among people under 40 — the main demographic for sports betting — the share who were at least 90 days late on a credit card payment rose 7.9% after legalization… For people in that age group, auto loan delinquencies increased by 5.6%, according to the paper by Jacob Goss… and Daniel Mangrum… ‘Our findings suggest that sports betting can have dramatic implications for household financial stability,’ the authors wrote…”
Global Credit Watch:
March 25 – Reuters (Yamini Kalia): “Barclays is scaling back its asset-based lending to smaller borrowers after its exposure to collapsed Market Financial Solutions Ltd and Tricolor Holdings left the firm facing losses… The British bank is shifting its focus to loans and securitizations for larger corporates, the report said, citing people who asked not to be identified discussing private information.”
Iran War Watch:
March 26 – Axios (Barak Ravid): “The White House and the Pentagon are considering sending at least 10,000 additional combat troops to the Middle East in the coming days… If the Trump administration decides to send extra troops, it will significantly increase the number of combat soldiers the U.S. has in the region. It is another signal that a U.S. ground operation in Iran is being seriously prepared. The massive surge in ground troops is being considered as President Trump says the U.S. is negotiating with Iran on a deal to end the war. Iranian officials haven’t agreed yet to hold a high-level meeting with the U.S. and they are suspicious that the U.S. diplomatic push is another trick.”
March 26 – Axios (Barak Ravid): “The Pentagon is developing military options for a ‘final blow’ in Iran that could include the use of ground forces and a massive bombing campaign, according to two U.S. officials... A dramatic military escalation will grow more likely if no progress is made in diplomatic talks and, in particular, if the Strait of Hormuz remains closed. Some U.S. officials think a crushing show of force to conclude the fighting would create more leverage in peace talks or simply give Trump something to point to and declare victory. Iran also has a say in how the war ends, and many of the scenarios under discussion would risk prolonging and intensifying the fight… Officials and sources familiar… describe four major ‘final blow’ options Trump could choose from: Invading or blockading Kharg Island, Iran’s main oil export hub. Invading Larak, an island that helps Iran solidify its control of the Strait of Hormuz… Seizing the strategic island of Abu Musa and two smaller islands, which lie near the western entrance to the strait and are controlled by Iran but also claimed by the UAE. Blocking or seizing ships that are exporting Iranian oil on the eastern side of the Hormuz Strait.”
March 26 – Financial Times (Najmeh Bozorgmehr): “Since the US and Israel launched their strikes on Iran, they have killed not only Ayatollah Ali Khamenei but a string of other senior figures. As strikes pounded Iranian cities, Tehran has sought to project continuity — keeping powerful institutions intact even as the country’s ultimate decision maker, senior military figures and top security official were assassinated… Political shifts appear to have been managed discreetly, with no visible infighting — at least for now. But the war is a major turning point in the Islamic republic’s 47-year history. Analysts say the conflict has created a regime that looks more hawkish and militaristic at home and abroad, with the Islamic Revolutionary Guard Corps wielding more clout than before the war.”
March 26 – Wall Street Journal (David S. Cloud, Dov Lieber and Milan Czerny): “The U.S. and Israel are pounding Iran’s missile-launching sites, hitting some over and over across almost a month of war. But Tehran’s missiles keep flying… Even in small numbers, the weapons have helped Tehran achieve its goals—prolong the conflict, raise the economic costs on oil-exporting Gulf countries and in the U.S., and survive to fight another day. ‘They’re not doing the big volleys like they were doing in the early days, but they don’t need to,’ said retired Gen. Joseph Votel, the former commander of U.S. Central Command. ‘All they really have to do is get something through, and they get a big bang for the buck’.”
March 26 – Financial Times (Mehul Srivastava and Neri Zilber): “The Israeli military is increasingly sceptical that regime change in Iran will be possible in the coming weeks, casting doubt on one of Prime Minister Benjamin Netanyahu’s core war aims as the Islamic republic shows its ability to endure intense bombardment. Two people familiar with the matter said the prevailing view within military intelligence was that the war had not created the conditions for ousting the Islamic regime in the near future. One of them… said it appeared that the aerial campaign had yet to measurably erode the Iranian regime’s hold on power…”
March 24 – New York Times (Julian E. Barnes, Tyler Pager and Eric Schmitt): “Saudi Arabia’s de facto leader, Crown Prince Mohammed bin Salman, has been pushing President Trump to continue the war against Iran, arguing that the U.S.-Israeli military campaign presents a ‘historic opportunity’ to remake the Middle East, according to people briefed… In a series of conversations over the last week, Prince Mohammed has conveyed to Mr. Trump that he must press toward the destruction of Iran’s hard-line government… Prince Mohammed… has argued that Iran poses a long-term threat to the Gulf that can only be eliminated by getting rid of the government.”
March 23 – Wall Street Journal (Summer Said and Jared Malsin): “U.S. allies in the Persian Gulf are inching toward joining the fight against Iran, getting tougher following persistent attacks that have disrupted their economies and risk giving Tehran long-term leverage over the Strait of Hormuz. The recent steps support America’s ability to carry out airstrikes and open up a new line of attack on Tehran’s finances. They don’t yet go as far as deploying their militaries openly in the fight, a line the Gulf’s rulers have hoped not to cross, though pressure is building as Iran threatens to exert greater sway over the energy-rich region.”
March 25 – Reuters: “Hezbollah chief Naim Qassem said… in a televised speech read on his behalf that negotiating with Israel under fire amounts to imposed surrender and called for unity against Israel. The speech… said Hezbollah fighters were prepared to continue ‘without limits’.”
March 26 – Reuters (Mohammed Ghobari and Emma Farge): “Yemen’s Iran-aligned Houthi movement, whose attacks on the Red Sea caused international shipping and trade chaos during the Gaza war, stands ready to strike the key waterway again in solidarity with Tehran, one Houthi leader told Reuters… If the Houthis open a new front in the conflict, one obvious target would be the Bab al-Mandab Strait off the coast of Yemen, a key shipping chokepoint and narrow passageway that controls sea traffic towards the Suez Canal… ‘We stand fully militarily ready with all options. As for other details having to do with determining zero hour they are left to leadership and we are monitoring and following up with the developments and will know when is the suitable time to move,’ said the Houthi leader…”
March 23 – Bloomberg (Ben Bartenstein, Fiona MacDonald, Sam Dagher, and Mirette Magdy): “Donald Trump’s decision to back down from his threat to destroy Iran’s power infrastructure came after US allies and Gulf countries privately warned the president of the dangers of following through with his threat, according to people familiar… The US president said Monday he was giving Iran a five-day reprieve from his threatened action, pointing to new talks with Tehran he believed could broker a deal that would resolve the conflict. But Trump’s decision came after some allies cautioned that the war was quickly becoming a disaster. Regional partners told the US that permanent damage to Iranian infrastructure would almost inevitably result in a failed state after the conflict ended…”
March 22 – Reuters (Maayan Lubell, Alexander Cornwell and Idrees Ali): “Iran said on Sunday it would strike the energy and water systems of its Gulf neighbours in retaliation if U.S. President Donald Trump follows through with a threat delivered a day earlier to hit Iran’s electricity grid in 48 hours, escalating the three-week-old war… Iran’s Parliament Speaker Mohammad Baqer Qalibaf doubled down, writing on X that critical infrastructure and energy facilities in the Middle East could be ‘irreversibly destroyed’ should Iranian power plants be attacked. Iran’s powerful Revolutionary Guards said it would also mean the shipping lane where a fifth of global oil and liquefied natural gas normally transits along Iran's southern coast would remain shut.”
March 25 – Wall Street Journal (Yaroslav Trofimov): “Video clips released by Iranian-backed Iraqi militias this week looked eerily familiar to anyone who has followed the war in Ukraine. Drones piloted by fiber-optic wires that render jamming useless cruised above an American base in Baghdad. Then, the first-person-view drones, also known as FPVs, dived to strike their targets: an American Black Hawk helicopter on the ground and an air-defense radar system. It is a new way of war, and it has come to the Middle East… ‘Any U.S. boots on the ground or warships in the Gulf will be ‘close in’ targets, and FPV drone use will be part of both sides’ capabilities,’ said Martin Sampson, a retired Royal Air Force air marshal… He heads the Middle East branch of the International Institute for Strategic Studies…”
Iran War Ramifications Watch:
March 26 – New York Times (Alex Morales): “A month into its war with the United States and Israel, Iran is still using its stranglehold on the Strait of Hormuz to its advantage… The shortages have roiled the economies of many countries, especially those in Asia. In recent days, Tehran has projected itself as the controller of the waterway, saying it will let ships from certain countries go through the strait, through which a fifth of the world’s oil and gas supplies travels in normal times. Iran has allowed the passage of a small number of ships, most apparently headed for Asia, but it has continued to threaten vessels linked to Israel, the United States and its allies.”
March 23 – Financial Times (Chris Krebs): “The Strait of Hormuz is 21 miles wide at its narrowest point. Twenty-five per cent of the world’s traded oil passes through it. Everyone has been focused on that. But the strait also carries the fertiliser components that underpin roughly half the world’s food supply. And Iran has in effect closed it… during the four-week window when farmers in the northern hemisphere apply nitrogen to their crops. Gulf states account for 49% of globally traded urea and 30% of ammonia, perishable contributors to the nitrogen cycle that makes high-yield agriculture possible. When that supply chain stops, the effects accumulate quietly in soil chemistry and planting decisions over the months that follow.”
March 24 – Bloomberg (Pratik Parija, Ilena Peng, and Eleanor Thornber): “Governments are rushing to secure supplies of critical crop nutrients ahead of spring planting, as the Middle East war chokes off the flow of commodities and amplifies fears of a global food crisis. Fertilizers exemplify the tight link between energy and food prices, underpinning harvests worldwide. The Middle East is a vital supplier, rich in both mineral reserves and the gas needed to produce nutrients for staples like corn, wheat and rice. With the Strait of Hormuz effectively shut, shipments have ground to a halt as Iran… In turn, prices of urea — the most widely used nitrogen fertilizer — have surged, with phosphate supplies also at risk. Much of global stock is tied to the Persian Gulf, and panic is spreading across major agricultural economies. Top exporters China and Russia are curbing some crop nutrient sales…”
March 25 – Bloomberg (Claire Jiao and Josh Xiao): “Governments across Asia are preparing for worst-case energy scenarios that could include a prolonged and severe disruption to supplies, as the US and Iran remain at odds over proposals to end a conflict that has roiled global markets. South Korea shifted into crisis mode on Wednesday, setting up an emergency economic task force to urgently prepare for adverse scenarios. The Philippines declared a national emergency, citing an ‘imminent danger of a critically low energy supply.’ Japan is reviewing its entire supply chain of petroleum-related products as the likelihood of shortages and knock-on effects across the economy grows, while India’s Prime Minister Narendra Modi warned the war could cause unprecedented challenges for the nation.”
March 25 – Politico (James Bikales and Ben Lefebvre): “Global energy leaders have been jolted by the enormity of what the U.S.-Israel war with Iran means for their business — and they’re not liking what they’re seeing. It’s the second time in four years that top White House officials have taken the stage at the CERAWeek by S&P Global conference to plead with producers to ramp up their drilling to cover supply disruptions from war-driven oil and natural gas price shocks... ‘We’ve not seen anything like this — there’s been no disruption of this scale in the past,’ Gareth Ramsay, chief economist at oil and gas giant BP, told the conference. ‘It’s every oil analyst’s study piece or worst nightmare — one that we never thought would happen’.”
March 25 – Wall Street Journal (Benoît Morenne and Collin Eaton): “Standing in front of a crowd of oil-and-gas executives this week, Energy Secretary Chris Wright reiterated that the chaos in global energy markets birthed by the U.S.-Iran war would be ‘short term.’ But on the stage and sidelines of a global energy conference in Houston, chief executives painted a much bleaker picture: Financial markets aren’t accurately reflecting the gravity of the crisis, the war is crippling the world’s fuel supplies, and the industry’s Middle East operations are at risk, they said… Some executives are privately expressing frustration with the administration’s optimistic messaging and say officials have shared no coherent plan for withdrawing the U.S. from a deepening crisis. They say price gyrations and the uncertainty hanging over the conflict make it all but impossible to plan investments—and that the disruption is already far-reaching.”
March 24 – CNBC (Spencer Kimball): “Kuwait… said Iran’s closure of the Strait of Hormuz amounts to an economic blockade of Gulf Arab oil producers, warning that the impact is beyond catastrophic and will trigger a domino effect across the world. ‘We are outraged by this attack against us,’ Sheikh Nawaf al-Sabah, the CEO of the Kuwait Petroleum Corp., told the oil industry at S&P Global’s CERAWeek energy conference... ‘This is an attack not only against the Gulf, but it is an attack that is holding the world’s economy hostage,’ said al-Sabah… ‘It’s a domino effect… The costs of this war don’t stay within geographical lines in this region. They extend all the way through the supply chain’.”
March 22 – Bloomberg (Ben Westcott): “More than 40 energy assets across nine countries in the Middle East have been ‘severely or very severely’ damaged by the war, International Energy Agency Executive Director Fatih Birol said… The damage means it will take some time for the oil fields, refineries and pipelines to come back online, Birol said… The effect of the current disruptions is equivalent to the two major oil crises in the 1970s and the 2022 natural gas crisis after Russia invaded Ukraine ‘all put together,’ Birol said.”
March 23 – Associated Press (Charlotte Graham-McLay): “The head of the International Energy Agency said Monday that the global economy faces a ‘major, major threat’ because of the Iran war. ‘No country will be immune to the effects of this crisis if it continues to go in this direction,’ Fatih Birol said… The crisis in the Middle East, he said, has had a worse impact on oil than the two oil shocks of the 1970s combined, and a worse effect on gas than the Russia-Ukraine war.”
March 24 – Bloomberg (Nathan Risser and Kevin Crowley): “Chevron Corp. is warning that California is careening toward an energy crisis because of the Iran war and that the company may quit refining oil in the state unless officials roll back taxes and regulations. California, the most populous US state, is highly exposed to the disruption rippling across commodity markets because it imports about 20% of its refined fuels from Asia.”
March 22 – Financial Times (Mohamed El-Erian): “But among the many other questions investors and policymakers should consider is a financial one: how will the relationship of the Gulf countries with international capital markets change in the short term? The six members of the Gulf Cooperation Council — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — have collectively grown over decades into one of the most consequential forces in global finance, investing across the world. But there is a risk that increased domestic need for funds in the wake of the war may have a temporary impact on those flows even if the long-term position of the countries is not in question.”
March 26 – Bloomberg (Alex Morales): “UK Prime Minister Keir Starmer suggested he won’t be bullied by Donald Trump in a further demonstration of how the US president’s war on Iran has frayed the so-called special relationship between their two countries. ‘My own view is that a lot of what is said and done has been to put pressure on me to change my mind, but I’m not going to do so,’ Starmer told Beth Rigby of Sky News… ‘When it came to the Iran war, I’ve said we’re not going to get dragged in because my judgment is that’s not in the interests of our country’.”
March 25 – Wall Street Journal (Bojan Pancevski and Max Colchester): “Authorities are investigating Iran’s suspected involvement in a string of terrorist attacks in Europe that have targeted Jewish sites in response to the war in the Middle East, security officials say. They suspect Iranian agents recruited individuals online to carry out attacks on Jewish schools, synagogues and companies linked to Israel, and set up a bogus group to claim responsibility for them.”
Trump Administration Watch:
March 26 – Associated Press (Jon Gambrell and David Rising): “Iran and the United States appeared at an impasse Thursday, hardening their positions over ceasefire talks and setting the stage for another potential escalation in the Middle East war… Meanwhile, President Donald Trump extended his deadline for Iran to open the Strait of Hormuz to April 6… Sirens over Israel warned of barrages of incoming Iranian missiles, and Gulf nations worked to intercept fire... In a war that appears defined by who can take the most pain, the U.S. has offered shifting objectives…”
March 26 – Wall Street Journal (Annie Linskey, Alexander Ward and Alex Leary): “President Trump has told associates in recent days that he wants to avoid a protracted war in Iran and that he hopes to bring the conflict to an end in the coming weeks. Nearly one month into the war, the president has privately informed advisers he thinks the conflict is in its final stages, urging them to stick to the four-to-six-week timeline… White House officials planned a mid-May summit with Chinese leader Xi Jinping in Beijing with the expectation that the war would be concluded before the meeting begins… The problem is Trump has no easy options for ending the war, and peace negotiations are at a nascent stage.”
March 24 – Axios (Barak Ravid and Marc Caputo): “Iranian officials have told the countries trying to mediate peace talks with the U.S. that they have now been tricked twice by President Trump and ‘we don’t want to be fooled again,’ according to a source with direct knowledge… But during the two previous rounds of U.S.-Iran talks, Trump green lit crippling surprise attacks while still claiming to be seeking a deal… Iranian officials have told the mediators — Pakistan, Egypt and Turkey — that U.S. military movements and Trump’s decision to deploy major troop reinforcements have increased their suspicion that his proposal for peace talks is just a ruse. To the Trump administration, the massing of forces is a sign he’s serious about negotiating from gunboats, not that he’s negotiating in bad faith. ‘Trump has a hand open for a deal and the other is a fist, waiting to punch you in the f***ing face,’ said a Trump adviser.”
March 25 – Bloomberg (Golnar Motevalli): “As US President Donald Trump doubles down on his claim that he’s negotiating with Iran to end the war in the Persian Gulf, a conservative politician of the Islamic Republic has emerged as his most likely counterpart. Mohammad-Bagher Ghalibaf is Iran’s speaker of parliament, a former mayor of Tehran and an ex-commander of the Islamic Revolutionary Guard Corps. Known for his hardline approach to dissent, he’s emerged as one of the most powerful figures in Iran’s wartime leadership structure. Ghalibaf’s past and comments since the war began suggest he’s unlikely to cave in to any demands from the US. He’s a staunch defender of the theocratic system that’s ruled Iran for almost 50 years and, in recent days, he’s implied Iran is winning the conflict by causing chaos in global energy markets, piling economic pressure on Trump.”
March 25 – Financial Times (Najmeh Bozorgmehr, Humza Jilani, Andrew England, Abigail Hauslohner, and John Paul Rathbone): “Iran’s top military leadership has scornfully dismissed Donald Trump’s claims that the Islamic republic was ready to make a deal after Washington presented Tehran with a 15-point plan to end the war. ‘Our first and last word has always been, is, and will be this: someone like us will never come to terms with someone like you — not now, not ever,’ the Khatam al-Anbiya Central Headquarters, Iran’s military command, said in a video message... ‘Do not call your defeat an agreement. The era of your promises has come to an end.’ The statement reflected deep scepticism in Iran that the US president is serious about a deal, along with the Islamic regime’s belief that it has the upper hand despite the destruction caused by thousands of US and Israeli strikes.”
March 25 – Axios (Zachary Basu): “An epidemic of suspicious trading has emerged around President Trump’s most consequential decisions — each time, just minutes or hours before he rattles global markets, according to exchange data. As the Iran war sends prices soaring for ordinary Americans, a select few appear to be profiting in plain sight. It’s precisely the kind of alleged corruption Trump built his political career railing against… The pattern has become impossible to ignore, spanning both traditional financial markets and fast-growing prediction platforms. On Monday, $580 million in oil futures flooded the market in a sudden spike — with no public news to explain it — roughly 16 minutes before Trump announced a pause in strikes on Iranian power plants. On the Friday before the war began, an unusual surge of more than 150 Polymarket accounts placed hundreds of bets predicting a U.S. strike on Iran by the next day…”
March 24 – Bloomberg (Yongchang Chin, Dan Murtaugh, and Jan-Patrick Barnert): “Futures for oil and stocks worth billions of dollars changed hands just 15 minutes before a social media post from US President Donald Trump sent crude prices tumbling and equities soaring. Contracts corresponding to at least 6 million barrels of Brent and West Texas Intermediate were sold in the two minutes from 6:49 a.m. in New York on Monday… The average for the same time period over the previous five trading days was about 700 lots — or 700,000 barrels. Trump’s Truth Social post was published at around 7:05 a.m. A similar increase in activity in US stock futures was observed on the S&P 500 with about 6,000 contracts traded, representing more than $2 billion in notional value.”
March 26 – Bloomberg (Jennifer A Dlouhy and Skylar Woodhouse): “Treasury Secretary Scott Bessent said a US insurance program meant to boost shipping through the Strait of Hormuz will begin soon… ‘The oil market is well-supplied. We’ve taken actions to ensure that oil supplies stranded at sea are made available to the global market,’ Bessent said. ‘Your bold actions, like the Development Finance Corporation’s maritime reinsurance program, in conjunction with Central Command, will soon provide shippers through the Gulf region with a level of security we have never seen before’.”
March 25 – Associated Press (Michael Kunzelman and Christopher Rugaber): “The Justice Department’s investigation of a $2.5 billion renovation project at the Federal Reserve didn’t find any evidence of a crime, a federal prosecutor privately conceded under questioning by a skeptical judge earlier this month… That admission by Assistant U.S. Attorney Andrew Massucco came during a March 3 hearing that was closed to the public… Eight days later, Chief Judge James Boasberg quashed government subpoenas issued to the Federal Reserve, dealing a severe blow to the government’s investigation. In his March 11 ruling, Boasberg said the government had produced ‘essentially zero evidence’ to suspect Fed Chair Jerome Powell of a crime.”
March 24 – Bloomberg (Enda Curran): “Treasury Secretary Scott Bessent regularly says his motivation to get ‘out from behind my desk’ and enter public service was concern about growing US debt. Developments over the past several weeks have left those alarms ringing even louder. First came the Supreme Court’s ruling against President Donald Trump’s sweeping tariffs — a significant source of revenue for the federal government… Then Trump’s war on Iran drove up the government’s spending needs and clouded the outlook for growth, raising risks for revenue flows. The Pentagon has already asked for an additional $200 billion to finance the conflict.”
March 22 – Bloomberg (Tony Czuczka): “A senior Cuban official said the country is preparing for a possible military assault as President Donald Trump increases economic pressure on the government in Havana… ‘Our military is always prepared,’ Deputy Foreign Minister Carlos Fernandez de Cossio said… ‘And in fact it is preparing these days for the possibility of military aggression. We would be naive if, looking at what’s happening around the world, we would not do that. But we truly hope that it doesn’t occur’.”
March 24 – Bloomberg (Eric Roston and Lorelei Smillie): “Kate Marvel, a high-profile NASA climate scientist, resigned from the space agency’s Earth research division Tuesday, citing in a resignation letter the Trump administration’s attacks on science and ‘upheavals of the past year.’ ‘I never expected that science itself would come under attack, simply because it — like journalism, history, and even the best kind of art — is a way of seeking truth,’ she wrote in the letter… addressed to Gavin Schmidt, director of NASA’s Goddard Institute of Space Studies, and Ron Miller, the institute’s deputy director.”
Constitution Watch:
March 26 – Wall Street Journal (Heather Somerville): “A U.S. federal judge… halted the Trump administration’s designation of Anthropic as a supply-chain risk, issuing a ruling that the government trampled free-speech protections when it classified the artificial-intelligence company as a security threat and barred government use of its models. Judge Rita F. Lin of the Northern District of California… ordered the Trump administration to desist from applying the president’s directive that federal agencies stop using Anthropic’s technology, and from implementing its designation of the company as a risk to the national security supply chain.”
Budget Watch:
March 22 – Axios (Neil Irwin): “The United States faces a dire and unsustainable fiscal outlook. You’d never know it from the action in Washington. Across parties and policy areas, you’d never guess that the U.S. faces fiscal constraints created by its high-and-rising public debt, ballooning deficits without precedent in times of prosperity, and a looming entitlement spending crisis… The Trump administration is seeking $200 billion to fund the Iran war and replenish depleted weaponry. The Supreme Court struck down the administration's use of emergency authority to impose tariffs… For all the attention on DOGE one year ago, there has been little evidence of lasting restraint of federal spending. Caps on discretionary spending for the 2024 and 2025 fiscal years, part of a spending deal in 2023, weren’t extended. That all follows tax legislation enacted last year that the Congressional Budget Office scored as increasing cumulative deficits by $3.4 trillion over a decade…”
March 25 – Reuters (Susan Heavey and Abhinav Parmar): “The Pentagon said… it had reached framework agreements with BAE Systems, Lockheed and Honeywell to boost production of defense systems munitions as part of a push to put the U.S. military on a ‘wartime footing’.”
Trade War Watch:
March 27 – Wall Street Journal (Hannah Miao): “China on Friday opened two probes into U.S. trade practices, keeping pressure on Washington ahead of President Trump’s visit to Beijing in May. The Chinese probes mirror new investigations by the U.S. that could raise tariffs on Chinese goods. A summit between Trump and Chinese leader Xi Jinping is scheduled for May 14-15 in Beijing. ‘Both sides are building up maximum leverage before the meeting,’ said Dan Wang, a China director at consulting firm Eurasia Group.”
March 23 – Bloomberg (Jorge Valero and Oliver Crook): “US Ambassador to the European Union Andrew Puzder warned the bloc should expect more tariffs if it doesn’t approve a stalled trade deal with Washington. ‘If the trade deal goes away, you guys get hit with the increased tariffs, and for us, nothing changes,’ Puzder told Bloomberg…”
New World Order Watch:
March 25 – Politico (Victor Jack, Chris Lunday and Esther Webber): “Donald Trump’s messaging on what he wants from American allies in his war against Iran is so confusing that any effort to help in reopening the Strait of Hormuz remains deadlocked, according to four European government officials. Washington has not made any formal requests for equipment, said the officials… More than 30 nations, including a majority of NATO countries, have pledged ‘appropriate efforts’ to restart shipping through the critical trade chokepoint after the U.S. president slammed allies as ‘COWARDS’ for failing to volunteer their assistance.”
March 21 – Financial Times (Joe Leahy and William Langley): “China sought to woo global chief executives including Apple’s Tim Cook, UBS’s Sergio Ermotti and HSBC’s Georges Elhedery in Beijing on Sunday, touting the country’s safety and reliability in stark contrast to a US bogged down in war with Iran. Premier Li Qiang told more than 70 chief executives gathered… for the government’s annual Davos-style forum that the world’s second-largest economy offered an unmatched supply chain and a predictable commercial environment. The country was committed to being a ‘cornerstone of certainty’ and a ‘harbour of stability’ in the face of rising trade protectionism and upheaval in the rules-based international order, said Li.”
March 24 – South China Morning Post (Ralph Jennings,Mia Nurmamat): “China has cut exports of two metals used in military technology to Japan while increasing shipments of rare earth magnets, in what could signal a muted warning after geopolitical tensions between the two Asian economies flared last year. Exports of gallium to Japan registered zero volume in the first two months of the year, compared with 8,007kg in the same period of 2025… Germanium exports were also at zero in January and February, compared with 400kg a year earlier.”
Ukraine Watch:
March 23 – Politico (Nicholas Vinocur): “The biggest fear of European leaders is that Donald Trump’s war in Iran will lead him to abandon Ukraine. Governments are terrified that the U.S. president could retaliate against America’s European allies for spurning his appeals for assistance in the Middle East, primarily by cutting off what’s left of U.S. help for Kyiv, according to four EU diplomats… As they scramble to avoid a permanent break in the transatlantic relationship, leaders hope their offer of limited support for his action against Tehran will suffice to convince Trump to stay the course in the conflict with Russia. The war in Iran ‘must not divert our attention from the support we give Ukraine,’ French President Emmanuel Macron said…”
March 26 – Associated Press (Barry Hatton): “The Iran war has deflected global attention from Russia’s all-out invasion of its neighbor Ukraine as Europe’s biggest conflict since World War II enters its fifth year and an emboldened Kremlin undertakes a spring offensive. The past week showed that neither side is easing up. Russia on Tuesday fired almost 1,000 drones and 34 missiles at Ukraine in one of the war’s biggest bombardments. The following day Ukraine launched almost 400 drones in the largest reported overnight attack on Russian regions and Crimea. Ukraine’s fate is still Europe’s top foreign policy issue, fueled by fears that Moscow has wider ambitions.”
U.S./Russia/China/Europe/Iran Watch:
March 26 – Bloomberg (Andrea Palasciano, Max Ramsay, and Oliver Crook): “Russian intelligence is helping Iran target Americans and US allies, according to the European Union’s foreign affairs chief Kaja Kallas… Kallas called on the US to step up pressure on Moscow by supporting Ukraine’s effort to counter the Russian invasion. ‘We see that Russia is helping Iran with intelligence to target Americans, to kill Americans,’ Kallas told reporters. ‘Russia is also supporting Iran now with the drones so that they can attack neighboring countries and also US military bases’.”
March 26 – Reuters (Steve Holland and Alexandra Alper): “SMIC, China’s largest chipmaker, has sent chipmaking tools to Iran’s military, two senior Trump administration officials said…, raising questions about Beijing’s stance in the month-old U.S.-Israeli conflict with Iran. SMIC, which has been heavily sanctioned by the U.S. government over alleged ties to the Chinese military, began sending the tools to Iran roughly a year ago and ‘we have no reason to believe that any of this has stopped,’ one of the officials said.”
Taiwan Watch:
March 20 – Financial Times (Kathrin Hille): “Taiwan is concerned that the Iran war is depleting stocks of long-range cruise missiles that would be vital for the US to help defeat any Chinese invasion… The US is estimated to have fired hundreds of so-called Joint Air-to-Surface Standoff Missiles (JASSMs) during weeks of conflict in the Middle East, as well as ship-launched Tomahawk missiles. Defence experts said both would be crucial in any conflict over Taiwan because they can be fired from outside the range of an enemy’s air defences, diminishing the risk for an attacking aircraft or naval vessel.”
March 24 – Reuters (Ben Blanchard): “The United States has ‘quite a high’ sense of urgency in helping Taiwan strengthen its military capabilities and is working to help speed up delayed weapons deliveries, the island's Defence Minister Wellington Koo said… Taiwan, which faces a rising military threat from China, has complained of repeated delays to weapons ordered from the United States, the most important international backer and arms supplier to the island, which Beijing claims as its territory.”
AI Bubble/Arms Race Watch:
March 26 – Reuters (Eduardo Baptista): “Tightened supply of helium due to the Middle East conflict has started affecting some production in the global tech supply chains, leaving companies scrambling to secure alternative supplies, industry executives said. Helium is used in several key stages of chipmaking, including cooling, leak detection and precision manufacturing processes, and its prices have soared since the Middle East crisis began… ‘A helium shortage is an absolute concern,’ said Cameron Johnson, senior partner at supply chain consultancy Tidal Wave Solutions…”
March 26 – New York Times (Lydia DePillis): “The torrential wave of data center construction for artificial intelligence has seemed unstoppable. Unconstrained by interest rates or labor costs, the biggest tech companies in the world are pouring trillions of dollars into land, electronics and new power plants… But lately, zoning commissions and county councils across the country have been resisting. Unnerved by the data centers’ voracious electricity demands and sprawling footprints, they are denying permits and withdrawing tax breaks at a rate that is forcing companies like Google, Microsoft and Meta to take a different tack… ‘A lot of the commitments and the build-out of data centers where it’s easy has kind of been done, so you’re getting marginally more difficult,’ said Todd Castagno, a managing director at Morgan Stanley. ‘From a markets perspective, expectations might be, maybe not reset, but realigned with the fact that it’s hard to put a couple trillion dollars in the ground in a short time’.”
Bubble Watch:
March 24 – Bloomberg (Alexandra Semenova): “For retail investors, the US stock market’s most reliable dip buyers in recent years, risks are starting to outweigh the rewards. The cohort on Monday notched its first day of net selling of single stocks since November 2023, dumping $20.6 million worth of shares, data from Vanda Research show.”
March 25 – Bloomberg (Nino Paoli): “Average Wall Street bonuses jumped to a record last year, with the total pool for payouts rising to $49.2 billion as profits and revenues soared. The average annual bonus rose 6%, to $246,900, according to… New York State Comptroller Thomas DiNapoli… The total pool is the largest in records going back to 1987… The figure marked a second consecutive year of record-breaking bonuses for securities industry workers… Bankers entered 2026 after a windfall last year that included an upswing in dealmaking and a record $134 billion of trading revenue.”
March 26 – Wall Street Journal (Nicole Friedman and Veronica Dagher): “The mortgage-finance giant Fannie Mae will soon accept so-called crypto-backed mortgages for the first time, the latest expansion of cryptocurrencies into mainstream financial transactions. The mortgage company Better Home & Finance and the U.S. crypto exchange Coinbase Global unveiled a new mortgage product Thursday that allows home buyers to pledge their crypto holdings when getting a Fannie-backed mortgage, instead of selling the crypto to make a cash down payment.”
Inflation Watch:
March 26 – Bloomberg (William Horobin): “The conflict in the Middle East is reviving the specter of inflation and hobbling the global economy just as it was showing signs of strengthening at the start of the year, the OECD said. In its updated…, the… organization sharply increased its inflation forecasts for major economies and now sees the average rate for the Group of 20 this year jumping to 4% — with an even higher pace in the US — rather than the 2.8% it predicted in December… ‘The breadth and duration of the conflict are very uncertain, but a prolonged period of higher energy prices will add markedly to business costs and raise consumer price inflation, with adverse consequences for growth,’ the OECD said.”
March 26 – Financial Times (Susannah Savage): “US farmers are being hit by an ‘unbearable’ surge in fertiliser and fuel costs driven by the Iran conflict as President Donald Trump prepares to meet with groups from the critical political constituency on Friday. Disruption to fertiliser production in the Middle East and shipments through the Strait of Hormuz — a route for roughly a third of global seaborne supply — has pushed up prices by more than 40%, as the US enters its spring planting period when most farmers use the bulk of their fertiliser. ‘The timing on this conflict is… the worst time you could imagine,’ said Eric Mayberry, president of the Tennessee Farm Bureau. ‘We’re struggling to pencil out a profit… and increased fertiliser and fuel costs just make that problem even worse,’ he said. ‘It’s almost unbearable.’ ‘If the conflict rages on for extended period of time, we may not be able to get enough fertiliser to finish out the growing season,’ he said. ‘That’s very distressing… if we can’t get fertiliser, there’s not much point in planting’.”
March 25 – Bloomberg (K Oanh Ha): “Travelers hoping for a return to more moderate long-haul airfares this summer are in for a rude awakening. Ticket prices on major routes connecting Asia and Europe have surged up to 560% this month and are likely to stay elevated through the summer and into fall…, according to Alton Aviation Consultancy. For June travel, fares across seven popular Asia-Pacific to Europe routes are averaging about 70% higher than a year ago… A Sydney-to-London ticket now averages more than $1,500, roughly double last year’s price… There’s little relief in sight. Prices are expected to remain about 30% above last year’s levels even as far out as October.”
March 26 – Reuters (Pooja Menon and Pranav Mathur): “Disruptions to oil and petrochemical flows through the Strait of Hormuz following the outbreak of the Iran war have tightened global chemicals supply and lifted prices of plastics and polymer, used in everything from auto parts to toys, to roughly four-year highs. About $20 billion to $25 billion worth of petrochemical products pass through the Strait annually, according to Rabobank… ‘Anyone who imports from the Middle East, which is pretty much everyone in the rest of the world to a certain extent, has lost a large supplier and is having to scramble to find replacement resin at extraordinarily higher prices,’ said Joel Morales of Chemical Market Analytics by OPIS. The Middle East accounted for over 40% of polyethylene exports in 2025, led by Saudi Arabia… Prices for plastics such as polyethylene (PE) and polypropylene (PP) have surged since the Middle East conflict began, tracking higher crude and feedstock costs. ‘Global logistics have become uncertain, with up to 50% of polyethylene supply either offline, constrained or being impacted following the events in the Middle East,’ said Dow CEO Jim Fitterling.”
March 26 – Reuters (Hyunjoo Jin, Daewoung Kim and Sophie Yu): “From beer and crisps to noodles, toys and cosmetics, companies - and consumers - across Asia are bracing for a crisis as the Iran war wreaks havoc on supply chains, plastics and oil supplies, upending everyday life and sending prices soaring. For many, it is already crunch time. Choi Gun-soo, the manager of a 57-year-old South Korean factory that makes plastic films used by farmers to cover crops as well as by television manufacturers, said his suppliers were raising prices of some raw materials as much as 50%, while other suppliers had simply run out of stock.”
March 25 – Bloomberg (Vince Golle): “The cost of imports into the US jumped in February by the most in nearly four years, reflecting a broad pickup in prices even before war in the Middle East. Import prices increased 1.3% from the prior month…, boosted in part by higher prices for petroleum and natural gas. Excluding petroleum, import costs advanced 1.2%, the most since January 2022 and driven by a record monthly increase in capital goods costs as well as a pickup in prices of consumer merchandise excluding automobiles.”
March 25 – CNBC (Dan Mangan): “The U.S. Postal Service… said it is seeking to impose a temporary 8% fuel surcharge for package and express mail deliveries to deal with rising transportation costs, which include higher oil prices as a result of the Iran war… The 8% surcharge would apply to postage on Priority Mail Express, Priority Mail, USPS Ground Advantage, and Parcel Select products.”
Federal Reserve Watch:
March 22 – Bloomberg (Enda Curran): “Federal Reserve Chair Jerome Powell… lauded the policy record of the late Fed Chair Paul Volcker, who raised interest rates and sparked a recession to tame the high inflation that took off during the 1970s. In…remarks to the American Society for Public Administration’s annual conference — which honored Powell with the Paul Volcker Public Integrity Award — the Fed chair credited his predecessor for acting with courage and integrity while in office. ‘Paul Volcker set an example that all public servants should emulate. His actions remind us that independence and integrity are inseparable — we need independence to do what is right, and we need integrity to use that independence wisely,’ Powell said. ‘Ultimately, each of us will want to look back at the arc of our lives and know that we did what was the right thing’.”
March 22 – Wall Street Journal (Nick Timiraos): “Kevin Warsh is facing one of the most awkward Federal Reserve leadership transitions in decades. The economy has grown more complicated than when he promised interest-rate cuts last year while campaigning for President Trump to nominate him for the job. Even before the war in Iran sent energy prices higher, the Fed’s preferred inflation measure was heading in the wrong direction. The war threatens to push inflation higher still in the coming months, and investors now view rate increases to be more likely than cuts this year. The confirmation process, meanwhile, has stalled, making it hard to say whether Warsh will take over when Fed Chair Jerome Powell’s term ends in two months. That means Warsh could ultimately arrive at a Fed under pressure from a president demanding lower rates and colleagues skeptical of cuts—all while Powell has signaled he may not leave.”
March 26 – Yahoo Finance (Jennifer Schonberger): “Federal Reserve Vice Chair of Supervision Philip Jefferson said… he expects the war in Iran will push up inflation in the near term and that interest rates are ‘well-positioned’ to respond to a range of economic outcomes. ‘At least in the short term, I expect overall inflation to move higher, reflecting a rise in energy prices stemming from the conflict in the Middle East,’ Jefferson said…”
March 26 – Reuters (Dan Burns): “Federal Reserve Governor Lisa Cook said… the war in Iran has shifted the balance of risks for the central bank's dual mandate of price stability and full employment more toward inflation. ‘I see the balance of risks as being largely, on net, in balance, but I would argue that the inflation risk is greater right now as a result of the Iran war,’ Cook said…”
March 23 – Bloomberg (Maria Eloisa Capurro): “Federal Reserve Bank of Chicago President Austan Goolsbee said he could envision the US central bank needing to raise interest rates, or returning to rate cuts, depending on how the war in the Middle East plays out. ‘We could be back to the environment with multiple rate cuts for the year if inflation behaves,’ Goolsbee said… ‘I could see circumstances where we would need to raise rates if it was going a different way, and inflation was getting out of control’.”
March 26 – Reuters (Howard Schneider): “A price shock from higher oil prices could trigger rising inflation expectations that the U.S. Federal Reserve needs to guard against, Fed Governor Michael Barr said… If the Iran conflict ‘continues for some time, the spike in energy prices and other commodities could have broader implications for both prices and economic activity,’ Barr said… ‘We have had five years now of inflation at elevated levels, and near-term inflation expectations have risen again, so I am particularly concerned that yet another price shock could increase longer-term inflation expectations… We need to be especially vigilant,’ Barr said.”
March 26 – Wall Street Journal (Matt Grossman): “The Federal Reserve is on track to significantly reduce its monthly purchases of government bonds after mid-April, according to Fed markets official Roberto Perli… Perli, a New York Fed official who manages the Fed system’s presence in financial markets, reiterated previous Fed guidance that the volume of Treasury securities bought monthly by the Fed is likely to decline after the U.S. income-tax season ends... ‘The monthly pace can likely be significantly reduced after April 15,’ Perli said… ‘To account for uncertainty and other factors, that reduction may be somewhat gradual’.”
March 26 – Financial Times (Claire Jones and Ian Hodgson): “A top Federal Reserve official has claimed the US central bank could eventually shrink its bloated $7tn balance sheet by up to $2tn, without roiling financial markets. Stephen Miran, a Fed governor…, said measures such as easing liquidity regulations and destigmatising the use of some of the central bank’s lending operations could pave the way for ‘$1tn to $2tn of balance sheet reduction’. Miran added his ideas would need to be ‘studied and calibrated’, with the implementation process taking ‘several years’.”
U.S. Economic Bubble Watch:
March 25 – Reuters (Lucia Mutikani): “The U.S. current account deficit narrowed sharply in the fourth quarter, hitting the lowest level in nearly five years, amid a rise in primary income and a reduction in the goods trade deficit partly because of tariffs on imports. The… current account deficit, which measures the flow of goods, services and investments into and out of the country, contracted by $48.4 billion, or 20.2%, to $190.7 billion last quarter.”
March 26 – Associated Press (Matt Ott): “The number of Americans applying for jobless aid inched up last week as employers continue to retain workers despite a labor market that has weakened considerably in the past year. U.S. applications for jobless aid for the week ending March 21 rose by 5,000 to 210,000 from the previous week’s 205,000… That’s right in line with the 210,000 new filings analysts… were expecting… The total number of Americans filing for unemployment benefits for the previous week ending March 14 fell by 32,000 to 1.82 million… That’s the lowest number of continuing claims since May 25, 2024…”
March 24 – Axios (Emily Peck): “Workers, especially those with a college degree, think the job market is awful, a new Gallup analysis… finds… Although the unemployment rate is relatively low at the moment, hiring has slowed a lot, particularly for professionals. Deteriorating worker sentiment can signal that things are about to get much worse. ‘Workers with higher levels of formal education were markedly less optimistic about the job market in 2025 than those with less schooling,’ writes Sarah Fioroni, a senior research consultant at Gallup.”
March 26 - Associated Press (Alex Veiga): “The average long-term U.S. mortgage rate climbed this week to its highest level in more than six months… The benchmark 30-year fixed rate mortgage rate rose to 6.38% from 6.22% last week… One year ago, the rate averaged 6.65%. This marks the largest one-week increase since April 2025 and the largest three-week increase since October 2024…”
China Watch:
March 24 – Bloomberg: “China Vanke Co.’s stake in a logistics firm that’s facing mounting investor concerns is adding to the strain on the distressed developer, just as another wave of looming debt maturities stokes default risks again. Vanke holds a 21% stake in Singapore-based GLP Pte., which saw its bond prices sink to distressed levels last week.”
Central Banker Watch:
March 25 – Wall Street Journal (Paul Hannon): “The European Central Bank would have to respond forcefully if inflation threatened to rise significantly above its target for a long time as a consequence of the conflict in the Middle East, President Christine Lagarde said… However, the policymaker said the key rate wouldn’t be lifted until there is ‘sufficient’ information available to judge the likely impact of the conflict. ‘If we expect inflation to deviate significantly and persistently from target, the response must be appropriately forceful or persistent,’ she said…”
March 25 – Associated Press (David McHugh): “The head of the European Central Bank says that businesses may be quicker to raise prices in response to the oil shock from the Iran war due to bitter memories of the inflation spike after Russia’s invasion of Ukraine in 2022. If oil and gas prices continue to rise, ‘the response of firms and workers may be faster than last time,’ ECB President Christine Lagarde said… ‘We have a more recent memory of high inflation, which could affect how quickly costs are passed on and compensation is sought,’ Lagarde said… ‘An entire generation has now lived through its first episode of high inflation — and it may not be as slow to react a second time’.”
Europe Watch:
March 25 – Bloomberg (Priscila Azevedo Rocha): “Europe is about to start the gas stockpiling season with key storage tanks depleted, meaning it will need to compete even more with Asian buyers to secure supplies, just as the Middle East conflict disrupts energy flows. Dutch facilities are now just about 6% full, the lowest for this time of year in data going to late 2010… In Germany, home to the region’s biggest sites, inventories are also much lower than usual, at about 22%...”
Japan Watch:
March 24 – Bloomberg (Yoshiaki Nohara and Akemi Terukina): “Japanese Prime Minister Sanae Takaichi looked to ramp up the nation’s response to the fallout from the war in Iran with a thorough review of the ecosystem of oil-related products, as the likelihood builds of shortages and knock-on effects across the economy. The Finance Ministry is also sounding out market participants on possible intervention in the crude oil futures market… in an apparent attempt to ease pressure on the commodity and currency stemming from the crisis.”
March 22 – Wall Street Journal (Megumi Fujikawa): “Japanese companies are poised to give workers their most significant pay raise in 35 years… Preliminary data from the nation’s largest labor union group, known as Rengo, showed that 1,100 members secured wage increases of 5.26% on average this year. The figure was slightly higher than last year’s 5.25% gain and would mark the steepest climb since 1991.”
Emerging Market Watch:
March 25 – New York Times (Alex TravelliChoe Sang-HunSui-Lee Wee and Jason Gutierrez): “Across Asia, countries already vulnerable to the sustained disruption in energy supplies from the Persian Gulf are also contending with an ominous side effect. Their currencies are being suffocated by a dollar that is surging in value… The fighting has revealed a second painful choke point. About 90% of international trade in goods — including the oil and gas that are skyrocketing in price — uses the American currency. And as often happens in times of global turmoil, investors are taking money out of riskier regions and putting more money into U.S. assets.”
March 22 – Bloomberg (Zijia Song and Vinicius Andrade): “Once a top pick among emerging-market investors, local-currency debt has become a losing trade. After months being boosted by a weaker dollar, slowing inflation and interest-rate cuts, the bonds have delivered a loss of more than 5% since the Iran war started... Just six of the 22 main emerging-market currencies are up against the dollar this year, compared with 17 before the conflict broke out.”
March 24 – Bloomberg (Gonzalo Soto and Alex Vasquez): “Mexico’s annual inflation accelerated much more than expected in early March… Inflation quickened to 4.63% in the first two weeks of March compared to the same period last year… The reading was… well over late February’s 4.13% print.”
March 24 – Bloomberg (Martha Viotti Beck): “Brazil’s central bank warned that inflation risks intensified after war in the Middle East broke out and said future steps in its easing cycle will be determined as new information is incorporated… ‘The risks to the inflation scenarios, both to the upside and to the downside, which were already higher than usual, intensified after the beginning of the Middle East conflicts,’ they said…”
March 25 – Bloomberg (Andy Mukherjee): “India’s largest private-sector lender, HDFC Bank Ltd., is scrambling to respond to investors’ concerns that highlight the extent to which some of the country’s most esteemed firms have lost precious cachet — and, occasionally, the market’s faith. Chairman Atanu Chakraborty resigned March 18, citing ‘certain happenings and practices’ at the bank that are ‘not in congruence with my personal Values and Ethics.’ He later told a TV interviewer that he didn’t depart due to wrongdoing at the lender.”
Social, Political, Environmental, Cybersecurity Instability Watch:
March 25 – Associated Press (Tammy Webber): “Oil depots spewing black smoke. Debris sinking in the Persian Gulf. Missiles pounding military sites. The Iran war has unleashed a toxic mix of chemicals, heavy metals and other pollutants that threaten everything from agriculture to drinking water to people’s health — and will leave behind environmental damage and health risks that could persist for decades, experts said. ‘All the burning of oil and gas fields in the coastal areas, all the ships that are there, the oil tankers that are being burned or (sunk) — all of these mean pollution,’ said Kaveh Madani, an Iranian scientist and director of the United Nations University Institute for Water, Environment and Health.”
March 24 – Associated Press (Seth Borenstein): “After smashing March heat records in 14 states and the U.S. as a whole, the gigantic heat dome that’s baked the Southwest is creeping eastward and may end up being one of the most expansive heat waves in American history, meteorologists and weather historians said. And it’s not going away for awhile, maybe not till the middle of the next week as April starts, said meteorologist Gregg Gallina of the National Weather Service’s Weather Prediction Center. ‘Basically the entire U.S. is going to be hot,’ Gallina said... ‘The area of record temperatures is extremely large. That’s the thing that’s really bizarre.’ This heat dome — in which high pressure is acting like a pot lid trapping hot air over a region — will leave Flagstaff, Arizona, with 11 or 12 straight days of temperatures higher than the city’s previous March record…”
March 24 – Bloomberg (Alastair Marsh): “JPMorgan… says aging, run-down grid infrastructure now risks undermining security goals, with everything from extreme weather to cyberattacks posing a growing threat. The Wall Street bank… describes the current decades-old grid network as a ‘national security risk.’ Against that backdrop, investments that make grid infrastructure more resilient are becoming ‘increasingly attractive,’ according to JPMorgan.”
March 23 – Bloomberg (Aaron Clark): “Global air quality declined in 2025, with more cities reporting standards below international health guidelines on the impact of severe wildfires and pollution from sectors including fossil fuels and agriculture. Data from almost 9,500 cities showed 14% met World Health Organization standards for annual average concentrations of harmful fine-particle matter, or PM2.5, according to… IQAir Group. That compared to a total of 17% a year earlier when nearly 9,000 cities were surveyed.”
March 26 – Bloomberg (Brian Kahn and Eric Roston): “Sea ice in the Arctic has tied last year’s record for its lowest-ever winter coverage. The findings, published… by the US National Snow and Ice Data Center, add to the clear signals that the Arctic is undergoing a rapid shift as the fastest-warming part of the world. Last year, sea ice topped out at roughly 14.3 million square kilometers. That represented a loss of 2.3 million square kilometers of ice… compared to 1979… This year the winter ice reached its high point on March 14, at a level that’s virtually indistinguishable from the year before.”
March 22 – Financial Times (Emiliya Mychasuk): “The Earth’s energy imbalance reached record levels last year, as the rate of solar radiation that entered the planet exceeded the amount leaving the system at a faster rate, the World Meteorological Organization said. The measure was included for the first time in the UN agency’s State of the Climate annual report, as the rate had more than doubled in the past 20 years while greenhouse gases continued to accumulate.”
