Three Things to Watch
- Energy prices will remain in focus this week with the impact of higher oil prices driving inflation and U.S. Federal Reserve (Fed) expectations higher, and concerns that oil will weigh on the economy. Oil futures continue to trade in backwardation with spot prices higher than futures prices, indicating that the markets believe the war will be short in duration.
- Very quietly the bond market has reacted to the spike in oil prices. Fed funds futures now indicate that the Fed is more likely to tighten than lower rates in 2026, and the 10-year note yield has increased more than 40 basis points in the three weeks since the war started. Two-year note yields are now above the Fed target rate, and bonds are reacting to rising energy process—another factor in recent equity weakness.
- The focus remains on news from the war but the University of Michigan Consumer Sentiment data will offer a good look on how the consumer feels about the economy and how inflation expectations are changing.
Three Things to Know
- Investor sentiment has shifted to extreme bearishness: 52% of individual investors expressed bearish sentiment over the next six months in the American Association of Individual Investors survey for the week ending March 19, the highest since May 2025. The bearish sentiment has risen +23 percentage points since early February, the largest increase since February 2025, amid the trade war. Meanwhile, just 30.4% of retail investors were bullish over the last week, the third-lowest reading since May 2025. Overall, bullish sentiment has declined for eight consecutive weeks. (Source: The Kobiessi Letter)
- Today’s energy crisis is very different from 2008, when the United States pumped around 5 million barrels a day of oil; today, it’s 13.8 million barrels a day. U.S. natural gas output has doubled to over 1,000 billion cubic meters a year. The United States is structurally less exposed to energy shocks, becoming more of a shock absorber for the rest of the world. (Source: Daniel Lacalle)
- Data centers now consume ~7% of U.S. power demand—up more than 10 times in two decades. (Source: Peter Mallouk)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.