The quarter limped across the finish line with energy, rates, and geopolitics doing most of the talking. The S&P 500’s weakest quarter since 2022 says plenty about the mood, while Brent near $115 and WTI above $104 kept inflation fears alive and gave investors one more reason to trim risk. A little quarter-end bounce showed up Tuesday, though the broader message stayed the same: when oil jumps this hard, almost every other asset starts acting like a supporting character.
The market still revolves around the same question: how long does the Middle East shock last, and how much damage does it do before anyone gets clarity? Gasoline moved back above $4 per gallon nationally, the dollar posted its strongest month since July, and investors kept treating the U.S. as the cleanest dirty shirt in a messy global laundry pile. Markets briefly grabbed onto reports suggesting Washington may prefer an off-ramp, yet fresh attacks and added troop deployments kept that relief trade on a very short leash.
Jerome Powell’s latest message came through clearly enough: the Fed can look through an oil spike for a while, though patience comes with an expiration date. In remarks that framed energy shocks as something monetary policy usually handles poorly in real time, he left room for a hold today and more resolve later if inflation expectations start drifting. That helped reinforce a theme Reuters captured well: financial conditions have already tightened sharply on their own, which gives central banks a little cover to watch markets do some of the heavy lifting.
Treasuries spent the week wrestling with a familiar headache: higher inflation risk colliding with higher fiscal strain. Reuters’ look at the Treasury market’s next test pointed to war funding, softer auction demand, and a deficit path that could push investors to ask for a bigger term premium. Yields eased a touch into month-end, though that looked more like nerves settling than a clean all-clear.
Under the hood, the economy still looks more slowed than stalled. The flash U.S. PMI composite slipped to an 11-month low, with services doing most of the fading while price pressures re-accelerated. Consumer psychology also darkened, as the University of Michigan sentiment index fell to 53.3 and one-year inflation expectations moved higher. That mix leaves markets staring at an unpleasant blend: slower activity, firmer prices, and a jobs report on April 3 that suddenly carries more emotional baggage than usual.
Europe received a fresh reminder that imported energy shocks still travel fast. Euro zone inflation rose to 2.5% in March, while Germany’s inflation rate jumped to 2.8% and the country’s major institutes reportedly cut growth forecasts for 2026 and 2027. The result: Europe joined the same awkward conversation the Fed is having — growth soft enough to worry about, inflation sticky enough to keep policymakers from relaxing.
China’s official manufacturing PMI climbed back into expansion at 50.4, the best reading in a year. That helped temper some of the gloom around global demand, even if export weakness and higher energy costs still hang over the outlook. For markets starving for a clean positive data point, China delivered one. For anyone hoping it changes the global script by itself, that may be asking a bit much.
Opening Day arrived Thursday, with the Dodgers beginning their title defense in familiar fashion and the rest of the league stepping into the long rhythm of a fresh 162-game season. The day carried all the usual markers that make baseball feel distinct: packed ballparks, clean box scores, aces taking the mound, and every Mets’ fan thinking, “Hey, maybe this is our year.”
Trust us — it’s not.