Morning Bid: Markets Under Pressure

• Oil prices saw a record $35 intraday swing with Brent crude nearing $120/barrel before falling below $90, eventually settling back above $100 as Tehran warned prices could reach $200
• U.S. gasoline prices are rising sharply and the Fed's preferred inflation gauge (PCE) is expected to remain well above the 2% target when released today
• JPMorgan is reassessing private credit loan exposure, raising concerns about hidden risks similar to pre-2008 subprime housing tremors that could be exposed by the current exogenous shock

Market Summary: Oil Crisis and Market Turmoil Amid Iran Conflict

Key Market Developments:

Wall Street experienced its worst day since the Iran war began, though losses were relatively modest—described as "barely a flesh wound"—given the severity of geopolitical tensions. The S&P 500, Dow, and Nasdaq all posted declines Thursday as markets grappled with a potential Strait of Hormuz shutdown and escalating Middle East conflict.

Oil Market Volatility:

The energy markets witnessed historic turmoil this week. Brent crude recorded a record-breaking $35 intraday swing, approaching $120 per barrel before falling below $90, then recovering to above $100 on Thursday. Tehran warned prices could reach $200 per barrel. The International Energy Agency announced the largest collective reserve release ever—400 million barrels from 32 member countries—though market response suggests this appears insufficient to stabilize prices.

U.S. gasoline prices are rising sharply, with consumers already feeling the impact. The U.S. has temporarily waived sanctions on Russian oil purchases to address refined fuel product shortages.

Inflation and Central Bank Actions:

February's U.S. Consumer Price Index remained at 2.4% year-over-year, though this predates the Iran conflict. Markets are focused on today's PCE inflation data—the Federal Reserve's preferred gauge—expected to remain above the 2% target.

Major central banks meet next week, including the Fed, ECB, Bank of England, and Reserve Bank of Australia (only the RBA is expected to cut rates). Communications will be closely watched regarding policymakers' crisis response strategies.

Additional Concerns:

JPMorgan reported write-downs on private credit loans, raising concerns about risks in opaque private credit markets and potential parallels to pre-2008 subprime housing issues.