Macro feels stuck in a holding pattern but underneath it’s a market being driven almost entirely by binary geopolitical outcomes.
Again, the focus this week remains firmly on the Strait of Hormuz, with Trump’s deadline for Iran acting as the next major pivot point. Headlines around a potential ceasefire have briefly lifted risk assets, only to be reversed by renewed threats of escalation. That push and pull has defined the week: Brent crude is holding around $110-$111, still up more than 50% since the conflict began, while equities and crypto continue to swing on each update with little underlying conviction.
Equities have struggled to build on recent gains, with S&P futures drifting lower into the deadline, while volatility has picked up modestly across FX and rates without tipping into full stress. The dollar remains the haven of choice, firming slightly as investors stay on the sidelines, and gold has stabilised around $4,650 after recent volatility. The broader message is one of caution, markets are not breaking but they’re not committing either.
In rates, the picture is equally mixed. US treasury yields remain elevated, with the 10-year around 4.35%-4.36% and still roughly 40bps higher since the conflict began, reflecting the inflation shock from energy. At the same time, markets are showing little conviction on policy direction, with swaps pricing effectively no chance of a near-term Fed move. The markets caught between inflation pressure from oil and growing uncertainty around the impact on growth, a dynamic that continues to point toward a stagflationary backdrop.
Bitcoin has remained range-bound between roughly $65k and $75k, currently trading around $68k after slipping alongside equities into the latest deadline. Despite extreme bearish sentiment and repeated geopolitical shocks, the $67k floor has held for over a month, a sign of underlying support. But equally, the market has failed to sustain any meaningful breakout higher.
Flows help explain that tension. Institutional demand was a key pillar through March, with ETF inflows exceeding $1.3bn and significant corporate buying supporting the market. More recently, however, that bid has become less consistent. ETF flows have turned more volatile, with both inflows and outflows appearing in quick succession, while broader positioning has shifted toward neutral. The result is a market that is stable, but increasingly fragile.
Looking ahead, the path remains highly binary. A credible ceasefire that restores some flow through Hormuz would likely see a sharp unwind of the oil risk premium and provide relief across risk assets, including crypto. But even in that scenario, infrastructure damage and disrupted supply chains mean a full reset is unlikely in the near term.
On the other side, further escalation (particularly any move targeting Iranian infrastructure) would likely rebuild the oil premium quickly, tightening financial conditions and reinforcing downside risks that markets may not yet be fully pricing.
Once again this is a headline-driven market with limited conviction, where positioning remains cautious and direction is dictated by geopolitics rather than fundamentals.