Global energy markets braced for another week of turmoil after a weekend US attack (“for fun” according to Trump) on Iran’s vital oil export facility on Kharg Island further exacerbated supply disruption.

This kept the oil futures price above $100 to start the week continuing the downward pressure on Asian and European stocks on Monday. Wall Street was beginning to tune out Trump veering incoherently between public threats of intensified strikes, promises of a quick conclusion and victory laps followed by declarations that there was still a lot of bombing left to do.

Nevertheless, Wall Street recovered some of its recent losses to close in the green as reports trickled in that a limited number of tankers were making it through and the price of oil eased a little to straddle the $100 level.

The tentative gains in US stocks continued into Tuesday after favorable sessions in Asia and Europe with the oil price taking a breather from its madcap volatility. The international community’s response to Trump’s “invitation” to send forces to help police the Strait of Hormuz ranged from ambivalence to swift out-of-hand rejection, but in the end was pretty much a blanket “thanks but no thanks” all round.

With two moderately positive sessions under its belt, Wall Street faced Fed Day on Wednesday in a fog-of-war world with energy prices more than 30% higher than where they were when the FOMC rate-setting committee last met in January and renewed oil price jitters after overnight strikes on multiple Persian Gulf oil facilities and stepped-up rhetoric from Iran. A hotter-than-expected PPI inflation report got the day off to a rocky start.

As everyone knew it would, the committee left the Fed Funds Rate unchanged at 3.625% (with only one dissent and that was from Trump’s manservant on the committee, Stephen Miran). The mostly unchanged quarterly Dot Plots saw the majority of the 19 meeting participants pointing to just one rate cut before year-end, although several officials anticipate no reductions at all in 2026. One member even projected a rate increase by mid-2027.

In the press conference, soon-to-be-outgoing chairman Jerome Powell expressed concern at where inflation seems to be heading and finally addressed his future at the Fed. The two-day gain in stock prices was quickly wiped out and shorter term interest rates jumped higher in response.

Thursday saw European central banks in the Eurozone, UK, Switzerland and Sweden joining Japan, Canada and the US in holding interest rates unchanged. There was more escalation in the Middle East with both Israel and Iran (much to Trump’s annoyance) striking energy facilities in the region, temporarily sending oil futures hurtling back towards $120.

Stagflation fears continue to grow. There just wasn’t a lot of good news out there and the S&P 500 and NASDAQ fell back again, although they did close well off their session lows. Interest rates continued their bumpy ride, marching relentlessly upwards with the impactful 10 year Treasury rate making new highs for the year.

Hopes of some kind of positive bounce-back on Friday were dashed as reports emerged of a potentially risky proposal for a US ground troop occupation of Iranian energy facilities and Trump branded fellow NATO member-nations as “cowards” for scoffing at his idea that they should somehow get more deeply embroiled in a war cooked up by his increasingly isolated administration and Israel, a conflict that is deeply unpopular with their own parliaments and voters.

Stocks plummeted, led lower by tech names and interest rates roared higher in both Europe and the US as traders are now judging that any hopes of a swift end to this war appear to be rapidly evaporating. This was all despite the White House’s increasingly frantic but decreasingly credible messaging that everything is absolutely fine, that this will all wrap up soon, that the Strait of Hormuz “will re-open itself” and that energy prices will quickly revert to pre-war levels as if nothing had happened.

The outcome was another brutal down-week for both stocks and bonds and another vigorous up-week for interest rates and energy prices.

Some other things I’m thinking about ..

* All the major US and international stock indexes are now negative for 2026 and are all trading below their technically important 200-day moving averages.

* The NASDAQ has now dropped in nine of the past ten weeks.

* At one point on Friday afternoon, the NASDAQ, the Russell 2000 Small Cap and the MSCI International indexes all entered into technical corrections, down more than 10% from a recent high.

* Gold just had its worst week in over 40 years. So much for the popular “safe haven” theory!

* According to futures prices, the most likely expected number of Fed Funds Rate cuts this year is now zero (see INTEREST RATE EXPECTATIONS below).

* The market probability that the Fed actually increases interest rates sometime in 2026 soared from literally 0% a week ago to over 30% by Friday.

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ARTICLE OF THE WEEK ..

Six (not-so) little lies that we tell ourselves about money.

.. AND I QUOTE ..

“Once you have something, it means nothing to you.”

Richard Nixon

LAST WEEK BY THE NUMBERS:

Last week’s S&P 500 market color courtesy of finviz.com

Last week’s best performing US sector: Energy (two biggest holdings: Exxon-Mobil, Chevron) for the third week in a row ⬆︎ 2.8% for the week

Last week’s worst performing US sector: Utilities (two biggest holdings: NextEra Energy, Southern Co.) ⬇︎ 4.9% for the week

* SPY, a US Large Cap ETF, tracks the S&P 500 index, made up of 500 stocks from a universe of the largest US companies. Its price fell 2.1% last week, is down 4.5% so far this year and ended the week 7.1% below its all-time record closing high (01/27/2026).

* IWM, a US Small Cap ETF, tracks the Russell 2000 index, made up of the bottom two-thirds in terms of company size of a universe of 3,000 of the largest US stocks. Its price fell 1.8% last week, is down 1.6% so far this year and ended the week 10.8% below its all-time record closing high (01/22/2026).

* VXUS, a Global Non-US ETF, tracks the MSCI ACWI Ex-US index, made up of over 8,500 of the largest names from a universe of stocks issued by companies from around the world excluding the United States, in both developed and emerging markets. Its price fell 2.7% last week, is down 1.0% so far this year and ended the week 9.0% below its all-time record closing high (02/25/2026).

INTEREST RATES:

* FED FUNDS RATE * ⬌ 3.625% (unchanged from a week ago)

* PRIME RATE ** ⬌ 6.75% (unchanged from a week ago)

* 3 MONTH TREASURY ⬆︎ 3.74% (3.72% a week ago)

* 2 YEAR TREASURY ⬆︎ 3.88% (3.73% a week ago)

* 5 YEAR TREASURY ⬆︎ 4.01% (3.87% a week ago)

* 10 YEAR TREASURY *** ⬆︎ 4.39% (4.28% a week ago)

* 20 YEAR TREASURY ⬆︎ 4.97% (4.89% a week ago)

* 30 YEAR TREASURY ⬆︎ 4.96% (4.90% a week ago)

Data courtesy of the Federal Reserve and the Department of the Treasury as of the market close on Friday

* Decided upon by the Federal Reserve Open Market Committee at periodic meetings 8x a year. Used as a basis for overnight interbank loans and for determining high yield savings interest rates.

** Wall Street Journal Prime Rate as of Friday’s close. Tending to move in lockstep with the Fed Funds Rate, this measure is used as a basis for determining certain consumer loan interest rates such as credit cards, auto loans, personal loans, home equity loans/lines of credit and securities-based lending.

*** Used as a basis for determining mortgage interest rates.

AVERAGE 30-YEAR FIXED MORTGAGE RATE:

* ⬆︎ 6.22%

One week ago: 6.11%, one month ago: 6.01%, one year ago: 6.67%

Data courtesy of the Freddie Mac Primary Mortgage Market Survey

INTEREST RATE EXPECTATIONS:

Where will the Fed Funds interest rate be after the next rate-setting meeting on April 29th?

* Unchanged from now .. ⬇︎ 88% probability (94% a week ago)

* 0.25% lower than now .. ⬆︎ 12% probability (6% a week ago)

With six more rate-setting meetings in 2026, what is the most commonly-expected number of remaining 0.25% Fed Funds interest rate cuts this year?

* ⬇︎ Zero (down one from a week ago and down from two the week before)

Data courtesy of CME FedWatch Tool as of the market close on Friday.

All data based on the Fed Funds interest rate (currently 3.625%).

PERCENT OF S&P 500 STOCKS ABOVE THEIR OWN 200-DAY MOVING AVERAGE:

* ⬇︎ 44%

One week ago: 48%, one month ago: 66%, one year ago: 41%

Data courtesy of MacroMicro as of Friday’s market close

This widely-used technical measure of market breadth is considered to be a very robust indicator of the overall health of the S&P 500 index.

A high percentage (above 70%) generally suggests broad market strength and a bullish trend, while a low percentage (below 30%) may indicate market weakness and a bearish trend.

FEAR & GREED INDEX:

“Be fearful when others are greedy and be greedy when others are fearful.” Warren Buffett.

Data courtesy of CNN Business as of Friday’s market close

The Fear & Greed Index from CNN Business can be used as an attempt to gauge whether or not stocks are fairly priced and to determine the mood of the market. It is a compilation of seven of the most important indicators that measure different aspects of stock market behavior. They are: market momentum, stock price strength, stock price breadth, put and call option ratio, junk bond demand, market volatility and safe haven demand.

Extreme Fear readings can lead to potential opportunities as investors may have driven prices “too low” from a possibly excessive risk-off negative sentiment.

Extreme Greed readings can be associated with possibly too-frothy prices and a sense of “FOMO” with investors chasing rallies in an excessively risk-on environment . This overcrowded positioning leaves the market potentially vulnerable to a sharp downward reversal at some point.

A “sweet spot” is considered to be in the lower-to-mid “Greed” zone.

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