Morning Bid: From 48 hours to five days

• Oil prices initially plunged more than 10% on Monday, with Brent falling to $97 and WTI to $86, but rebounded Tuesday to hover around $100 and $90 respectively after Iran's denial of negotiations
• Futures markets now price in zero Federal Reserve rate cuts through 2026, with expectations pushed to second half of 2027 due to energy-driven inflation concerns from the Iran conflict
• U.S. Treasury yields surged to seven-month highs early Monday before reversing, reinforcing the view that rising borrowing costs constrain Trump's more disruptive policy actions

Market Summary: Geopolitical Tensions Drive Volatility

Key Developments:

President Trump extended a 48-hour pause on attacks against Iranian power plants to five days following an apparent breakthrough with Tehran. However, Iran has denied any negotiations took place, calling reports "fake news," creating significant market uncertainty.

Market Impact:

Oil prices initially plunged over 10% Monday, with Brent crude dropping to $97/barrel and WTI touching $86. The relief proved short-lived as Iran's denial prompted prices to rebound Tuesday, with Brent hovering just above $100 and U.S. crude around $90. The Strait of Hormuz remains closed except to Iranian vessels, with continued missile activity.

U.S. equities rallied Monday with all major indexes finishing higher, while Treasury yields eased. However, momentum weakened Tuesday as confusion mounted over diplomatic communications. U.S. Treasury yields had earlier surged to seven-month highs before retreating, signaling that rising government borrowing costs remain a key constraint on presidential policy decisions.

Regional Responses:

• South Korea launched an energy-saving campaign
• China intervened with fuel price ceilings
• Japan reported February inflation below 2% for the first time in nearly four years, complicating Bank of Japan policy

Fed Outlook:

Futures markets no longer price any Federal Reserve rate cuts through 2026, with expectations now pushed to second half 2027 due to energy-related inflation concerns.

Additional News:

Apollo became the latest asset manager to restrict redemptions from its flagship private credit fund, capping withdrawals at 5% of assets.

Upcoming: March flash PMI data will reveal Middle East conflict impact on business confidence.