Iran war pause

Last week in markets

Markets moved lower as geopolitical risk and energy volatility intensified. The S&P 500 declined 2.1% last week, marking its fifth consecutive weekly loss and its weakest performance of the year. The index is now down 6.7% year to date. Despite a temporary pause in U.S. strikes on Iran, oil prices climbed back toward $115 per barrel. The 10-year U.S. Treasury yield rose five basis points to 4.44%, reflecting continued pressure from inflation expectations tied to higher energy costs.

Iran pause

Last Monday, President Trump announced a five-day postponement of planned military strikes on Iranian power infrastructure, citing progress in discussions with Tehran. While Iranian officials offered mixed signals on the status of those talks, the administration extended the deadline to April 6 to allow additional time for diplomacy. The conflict, now entering its second month, continues as Israeli strikes persist. The Strait of Hormuz remains largely constrained, limiting global oil flows. Iran allowed a small number of Pakistan-flagged tankers to pass, a modest step toward de-escalation. However, supply disruptions remain the central risk. If restrictions continue into June, further upward pressure on crude prices is likely.

Jobless claims

Labor market data continues to show resilience. Initial jobless claims increased by 5,000 to 210,000 for the week ending March 21, in line with expectations. The four-week moving average declined slightly to 210,500, while continuing claims fell to 1.819 million, their lowest level since May 2024. The data suggests that layoffs remain contained and that displaced workers are re-entering the workforce relatively quickly, even as broader economic uncertainty builds.

Consumer sentiment declines

Consumer sentiment weakened further in March, reflecting the growing impact of market volatility and higher energy prices. The final reading came in at 53.3, below both the preliminary estimate and consensus expectations. This marks a 6% decline from February and the lowest level since December 2025. The decline was most pronounced among middle- and high-income households, indicating that rising fuel costs and equity market losses are beginning to weigh more broadly on spending confidence. If sustained, this trend could translate into reduced discretionary spending in the coming months.

The week ahead

The central question for markets this week is whether the economy is entering a period of slower growth alongside persistent inflation. Attention will focus on Friday’s March nonfarm payrolls report, following February’s unexpected decline of 92,000 jobs. Expectations call for a modest rebound of 48,000 to 60,000 jobs. The result will help clarify whether the labor market is cooling or stabilizing after recent disruptions. Federal Reserve Chair Jerome Powell’s remarks today will also be closely watched. Markets are looking for signals on how the Fed is assessing inflation pressures tied to elevated energy prices and whether policy expectations may shift. Geopolitical risk remains a key driver. With the April 6 deadline for potential U.S. action approaching and oil prices near $115 per barrel, markets remain highly sensitive to developments that could further disrupt supply. Midweek ISM manufacturing and services data will provide additional insight into how rising input costs are affecting business activity and margins.