Market Perspectives
Major U.S. equity indices ended a volatile week sharply lower as investors grappled with the escalating conflict in the Middle East following U.S. and Israeli strikes on Iran, renewed energy-driven inflation risks, and a mixed batch of economic data. The Dow Jones Industrial Average led declines, falling 3.01%, while the S&P 500 dropped 2.02% — marking its fourth consecutive weekly loss. The Nasdaq Composite proved relatively resilient but still declined 1.24%. Fixed income markets reflected the shift in inflation expectations: the benchmark 10- year U.S. Treasury yield rose roughly 20 basis points as investors reassessed the potential for sustained energy-price pressures and the implications for Federal Reserve policy. Across the Atlantic, risk appetite deteriorated even more sharply as the conflict widened across the region. The pan-European STOXX Europe 600 tumbled 5.55% on the week, with Germany’s DAX falling 6.70%, France’s CAC 40 dropping 6.84%, and Italy’s FTSE MIB retreating 6.48%, while the UK’s FTSE 100 lost 5.74%. Asia extended the downbeat tone: Japan’s Nikkei 225 declined 5.49% and Hong Kong’s Hang Seng slipped 3.28%. Looking ahead, markets face a heavy slate of U.S. data — including the PCE inflation gauge and February CPI. Yet the real driver of sentiment will remain geopolitics. With energy markets, inflation expectations and risk premiums all tied to developments in Iran, will the conflict force an even deeper repricing of global risk assets?
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BONDS & MACROECONOMICS
The benchmark 10-year U.S. Treasury yield rose roughly 20 basis points as investors reassessed sustained energy-price pressures and the implications for Federal Reserve policy.
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