Macro Horizons Hello, Spring
Mar 20, 2026
Discussion of how Middle East conflict is pushing oil and gas prices and increasing energy market risk. Analysis of Treasury moves after Powell’s comments and spillovers from gilt and EGB markets. Examination of stronger PPI and labor data as upside inflation signals. Debate on how energy shocks could shape equities, politics, and the US rate path.
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Middle East Conflict Reframes Inflation Risk
- The war in Iran is the dominant driver of recent market moves, creating inflationary risk via energy supply disruption.
- Ian Lyngen notes PPI surprised higher in February and energy damage could rebase prices higher, keeping upside pressure on producer prices.
Front End Cheapens Above Fed's Rate Range
- Treasury two-year yields cheapened sharply after the FOMC press conference, trading above the Fed's target range and effective funds rate.
- Ian Lyngen highlights a bear-flattening move driven by gilt and EGB sell-offs and a hawkish reinterpretation of Powell's comments.
Powell's Tone Trumped Dot Plot
- Powell's press conference read hawkish despite dots showing cuts, causing meaningful bear flattening and two-year yields above 3.9%.
- Ben Jeffery ties the move partly to more hawkish BOE/ECB shifts and persistent energy-driven inflation risks.