Week in review and thoughts for the week of March 16, 2026

Earlier in the week, President Trump suggested the fighting could be ending soon. That comment led to a significant reversal in energy prices. Brent fell from an intraday high of $110.12/barrel to $80.60/bbl at one point on March 10 before closing the day at just under $94/bbl. But as the fighting intensified, prices recovered, ending at $97.67 on Friday, up by about $13/bbl. WTI ended up $8/bbl on the week, at $98.71.

We saw big moves in product prices as well, with both gasoline and distillates finishing at $3.04/gallon and $4.01/gallon, respectively — up by about $0.30/gallon and $0.40/gallon on the week. Prices at the pump have now soared by 20% to $3.58/gallon since the war started, according to AAA. The rise in crude is also fueling a corresponding surge in polymers, along with other items like sulfur, important for fertilizer production. Sulfuric acid is also being squeezed — an input in the pickling stage of stainless-steel production.

Strait of Hormuz

The firmer tone in crude is of course attributable to perceptions that the critical Strait of Hormuz remains unpassable, although certain vessels seem to be making in through. The US Navy has yet to escort oil tankers like it did during the 1980-89 Gulf War. But the administration says it intends to do so.

Trump is urging China, France, Japan, South Korea, Britain and others to deploy warships to secure the Strait, but we don’t see countries taking the president up on his offer anytime soon. Meanwhile, the US did strike military targets on Iran’s Kharg Island over the weekend, a critical staging area for loading crude, but the attacks did not target oil infrastructure. In turn, the Iranians launched a series of drone attacks on a key oil terminal in the United Arab Emirates.

With oil assets now either fair game for missiles and drones or bottled up in the Gulf, the IEA estimates that global oil supply is expected to fall by 8 million b/d in March. In view of this, the IEA has released a record 400 million barrels of oil from strategic stockpiles last week to allay supply fears and help guide prices lower.

Base metals

Although aluminum prices eased somewhat last week, Gulf metal remains stuck. As a result, Reuters reports traders like Mercuria are withdrawing large volumes of metal from LME warehouses, estimated to be around 100,000 tons.

Physical aluminum premiums remained elevated. Midwest-US is projected to be around $1.07/pound, hitting $1.12/lb at one point last week, while European-duty paid is hovering around $420/ton — a 3 1/2 year high. For the week as a whole, aluminum prices fell by 0.2%, while copper and nickel dipped by 0.6% and 1.16%, respectively. Lead and tin were the biggest losers, off by 2.3% and 6%, while zinc ended just about flat.

Precious metals

In the precious metals space, gold slipped for a second consecutive week, ending at just above $5,060/ounce, down about 1.3% on the week. Spot silver lost about 3.3%, settling around $81/ounce. There were sharp losses in platinum and palladium as well (down by 4% on 2.5%, respectively).

Our view is gold is not responding to the hostilities, as investors are focused instead on potentially higher inflation and interest rates down the road — both being bearish for the precious metal. The rest of the group is trading more in sympathy with a struggling base metals complex (apart from aluminum) as concerns about a possible global slowdown looms large.

Equity markets

Not surprisingly, US equity markets struggled this past week. The S&P 500 ended down by 1.6%, the NASDAQ fell by 1.3%, while the Dow lost 2.0%. The S&P 500 touched a new low for 2026 on Friday as well. The energy sector was the only group to finish in positive territory last week, up 2.1% for the period. Defensive areas held up well, including utilities (0.4%) and consumer staples (down .2%). But financials fell (by 3.4%) amid renewed concern about private credit. Transportation stocks were hit by rising fuel costs, while homebuilders were struck by rising treasury yields that will inevitably lead to higher mortgage rates. In this regard, the 2-year note yield ended up a whopping 17 basis points last week, settling at 3.73%, while the 10-year yield climbed 16 basis points to 4.29%.

The week ahead

Needless to say, we are in store for another week of watching developments in the Gulf and breaking headlines. There is still no talk about any negotiations (public or private) as both sides are ruling it out for now. So we are basically in a situation to see which side blinks first. But critically for the markets, any further attacks on oil assets could start another downward price spiral.

The Federal Reserve will also be meeting this week. We don’t expect the central bank to say or do anything for the moment, especially now that inflation readings are bound to push higher, at least over the short term.

Buckle up for another volatile week.

Macro readings and other news from the past week

• CPI prices rose in February, but the increase was modest as the numbers have yet to reflect the events unfolding in March. Prices rose by 0.3% last month from 0.2% in January. Excluding the volatile food and energy components, the CPI gained 0.2% after rising 0.3% in January.
  
  In the 12 months through February, the CPI advanced 2.4%, matching January’s increase. And the core increased 2.5% after rising by the same margin in January. Modest as the February headline increases were, March is expected to be worse, with some preliminary estimates now calling for a 1% increase next month on the overall CPI number.
• Also, somewhat reassuring (although a moot reading at this point given the war) was the January personal consumption expenditures price index, which increased by 0.3% after rising 0.4% in December.
  
  Excluding the volatile food and energy components, the index was up by 0.4% — similar to December’s. But core PCE remained elevated at 3.1% year-on-year, the largest gain since March 2024. Oxford Economics estimates the Iran war would add at least 0.3 percentage points to headline PCE inflation in March, courtesy of rising gasoline prices.
• Fourth quarter 2025 GDP was revised lower last week. The number came in at 0.7%, about half the previous estimate, and less than the 4.4% seen in Q3. The biggest downward revision was to exports, revised down to -3.3% from the first estimate of -0.9%. The government shutdown was also a big factor, shaving 1.16% from the overall number.
• US consumer spending increased in January by 0.4% after advancing by the same margin in December. There was increased spending on food, recreational goods and vehicles, furnishings and durable household equipment, but outlays on discretionary services, including restaurants and bars as well as hotel and motel stays, dropped. Spending on recreation and transportation services and clothing and footwear, all declined as well.
• US consumer sentiment eased to 55.5 this month from a final reading of 56.6 in February. The survey’s measure of inflation consumer expectations over the next year came in unchanged at 3.4%, while expectations for the next five years dipped to 3.2% from 3.3%. The survey was taken between Feb. 17 and March 9, with about half the responses collected at the start of the war.
• Existing home sales increased in February as lower mortgage rates and a slowing in home prices pulled some buyers back into the market. Sales rose by 1.7% last month to a seasonally adjusted annual rate of 4.09 million units, pretty much unchanged from the previous reading. Overall sales, however, were down 1.4% on a year-over-year basis. The inventory of existing homes increased 2.4% to 1.29 million units and was up 4.9% from a year ago.
• Non-defense capital goods orders, excluding aircraft, and a closely-watched proxy for business spending, were unchanged in January versus December. Shipments of core capital goods fell 0.1% after increasing 1.0% in December.
• Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, were unchanged in January after falling 0.9% in December.
  
  The US Trade Representative has initiated a series of investigations into excess capacity and production in the manufacturing sectors of 16 trading partners. The investigations, launched under Section 301 trade regulations, will focus on China, the EU, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India. Products that are covered will span a wide range and include aluminum, automobiles, batteries, machinery, non-ferrous metals, semiconductors and steel.
  
  “For too long, global overcapacity has plagued a broad array of manufacturing sectors, including steel, aluminum and many others,” the international president of the United Steelworkers trade union was quoted as saying. “We must push back against China and other ‘bad actors’ as they swamp world markets with their excess capacity and undermine our domestic industries.” This is going to be a drawn-out exercise in our view before any significant tariffs materialize.
• Reuters reports the government is making progress to refund $166 billion in illegal tariff collections with preparations about 40%-80% complete. Relevant agencies are developing an online claim portal that importers and brokers could use to submit refund requests, but there were no details as to how long this would take.

This week’s US macro readings

On Monday, we get the Empire State Manufacturing survey for March (expected up 4.157.1), followed by February industrial production (expected at .1%).

Tuesday brings us February pending home sales (expected at -1%, last -0.8%) followed by the March homebuilder confidence index (expected at 37, last 36).

Wednesday is the most important day of the week, as that is when the FOMC interest rate decision comes out, followed by Fed Chair Powell’s press conference. Earlier in the day, we get February producer prices (expected at .3%, last .5%) followed by January factory orders (expected at .2%, last -.7%).

Thursday brings us weekly initial claims (expected at 215,000, last 213,000), followed by the Philadelphia Fed manufacturing survey (expected at 11, last 16.3). New home sales figures also come out on Thursday (expected at 715,000, last 745,000).

No releases are out on Friday.

We wish all our readers all the best for the upcoming week.