The Top Line
Overnight Update
Just before last night's deadline, the U.S. and Iran agreed to a two-week ceasefire. Oil prices dropped more than 15% overnight — one of the biggest single-day moves in years — and stock futures jumped roughly 3%. Wednesday is set to open very differently from how Tuesday closed.
Tuesday was a day of nervous waiting — stocks barely moved as markets held their breath ahead of a military deadline that was resolved just in time. Wednesday morning looks like a relief rally, with stocks poised to jump and oil prices falling fast on ceasefire news.
Overnight Development — Ceasefire Announced
Shortly before Tuesday's 8 PM ET deadline, President Trump announced a two-week suspension of U.S. strikes on Iran, contingent on the reopening of the Strait of Hormuz. Iran confirmed safe passage through the strait for two weeks, coordinated with its armed forces. Markets responded immediately: WTI crude fell more than 15% to approximately $95 per barrel, S&P 500 futures surged roughly 2.8%, and 10-year Treasury yields declined sharply overnight. All analysis below reflects Tuesday's official 4 PM ET market close. The ceasefire is explicitly temporary — formal negotiations open Friday in Islamabad, and Iran's stated conditions retain substantial distance from Washington's position.
We are operating in a transitional regime defined by the collision of genuine domestic economic resilience and a geopolitically induced stagflationary shock that is now beginning to reverse. March payrolls printed 178,000 — nearly three times the 60,000 consensus estimate — confirming an underlying labor market that remains structurally sound, yet the Atlanta Fed's GDPNow model has decelerated Q1 growth to just 1.6% annualized as energy-driven inflation eroded real consumer purchasing power. The Fed held the federal funds rate at 3.5%–3.75% at its March 18 meeting, raised its 2026 inflation forecast from 2.4% to 2.7%, and eliminated any expectation of near-term easing, with seven of 19 participants now projecting zero cuts this year. The two-week ceasefire announced overnight introduces the first credible disinflationary impulse since the conflict began in late February, potentially reopening the policy optionality the Fed had been forced to abandon — though the structural gap between the parties' negotiating positions argues for cautious interpretation of what is, explicitly, a temporary pause.
Inflation
The big inflation story of 2026 has been oil prices. When the Strait of Hormuz — a narrow waterway that carries about one-fifth of the world's oil supply — was blocked by Iran, energy prices surged and pushed the cost of almost everything higher. The Federal Reserve (the central bank that sets interest rates to keep prices stable) had been signaling it would hold borrowing costs steady all year because of that pressure. Now, with a ceasefire announced and oil falling sharply overnight, that inflation threat is easing. Friday's official inflation report will still show elevated prices for March — because it covers the worst of the energy spike — but it's now a look backward, not forward.
Key Takeaway
Cheaper oil is the best inflation news you could get — it makes Friday's report less scary and reopens the door to possible rate cuts later this year.
The inflation picture entering Wednesday is in active transition. February CPI printed +2.4% year-over-year with a +0.3% MoM gain; core CPI registered +2.5% YoY and +0.2% MoM — still above the Fed's 2% target but on a trajectory that was, until late February, broadly encouraging. The onset of the Iran conflict and the effective closure of the Strait of Hormuz — through which roughly 20% of global oil supply transits — reversed that trajectory decisively. WTI crude surged 69% from the conflict's February 28 onset to Tuesday's close of $111.82, and the Cleveland Fed's real-time nowcasting model had projected March CPI at 3.16% YoY — a 76-basis-point acceleration from February — with Bank of America forecasting a 0.9% MoM headline print driven by an estimated 10.6% MoM jump in energy prices. Core CPI was expected at a softer 0.3% MoM, implying that second-round inflationary transmission into goods and services had not yet fully materialized — though structural upside risk from transportation and logistics costs was building.
Overnight's ceasefire and the associated 15% collapse in WTI crude to approximately $95 per barrel represents the most significant single disinflationary development since the conflict began. Friday's March CPI report (April 10, 8:30 AM ET) is now a backward-looking snapshot of peak energy shock conditions, not a forward read on where prices are headed. The more important question for the Fed is whether a two-week ceasefire, with Hormuz passage described by Iran as contingent on coordination with its armed forces and subject to undefined "technical limitations," is durable enough to justify revised policy signaling. At the March 18 meeting, the FOMC voted 11-1 to hold at 3.5%–3.75% and revised the neutral rate estimate upward to 3.125%, with seven of 19 participants projecting no cuts at all in 2026. That consensus formed before the ceasefire; today's FOMC minutes, covering the March meeting, will be read through the lens of a geopolitical environment that has already partially unwound.
Even under an optimistic ceasefire scenario, structural inflation pressures remain. Core services inflation re-accelerated to 0.4% MoM in January, OER (owners' equivalent rent) continues running between 0.3%–0.4% monthly, and the U.S. Energy Information Administration projects gasoline prices above $3 per gallon through at least end-2027. Glenmede estimates the oil price surge adds approximately 0.8% to inflation over the next year — a figure that will mechanically decline as crude retreats, but will not disappear immediately. The Fed's preferred framework of "wait-and-see" gives it maximum optionality here, and that posture is unlikely to change before a sustained ceasefire with confirmed Hormuz normalization is established. Markets have moved from pricing zero cuts to tentatively reopening the discussion; the precise calibration awaits Friday's CPI and the trajectory of negotiations.
Key Takeaway
The Fed enters Wednesday's FOMC minutes release in wait-and-see mode at 3.5%–3.75%, with financial conditions beginning to ease on ceasefire relief. Friday's March CPI will reflect peak energy shock conditions and is now a lagging indicator — the more important signal is whether Hormuz normalization is durable enough to reopen the rate-cut debate for the May 6–7 FOMC meeting.
Risk and Positioning
Tuesday gave us one of the more unusual market readings in recent memory. Stocks barely moved — finishing almost exactly where they started — but the market's fear gauge (the VIX) spiked nearly 7%, closing at its highest level in weeks. That combination means investors weren't buying or selling; they were frozen, waiting to see if bombs would fall at 8 PM. They didn't. Overnight, that fear is unwinding fast — stock futures are up roughly 3% and the anxiety premium built into markets over the past six weeks is beginning to evaporate. Gold, which people buy when they're worried, actually rose further overnight rather than falling — a sign that many investors aren't fully convinced the ceasefire will hold.
Key Takeaway
The relief rally is real, but gold staying high tells you the smart money is still keeping one eye on the exit.
Tuesday's session produced one of the starkest risk-sentiment divergences of the year: the S&P 500 closed +0.08%, practically unchanged, while the VIX surged 6.67% to close at 25.77. That gap — equities flat, implied volatility spiking — is the fingerprint of a market that spent the entire session pricing a binary geopolitical outcome rather than expressing a directional view. Options markets bid up protection aggressively into the 8 PM deadline, and the VIX closing above 25 while equities barely moved tells you the net positioning was paralysis, not conviction. For context, the VIX's 52-week range runs from 13.38 (December 24, 2025 low) to 60.13 (April 7, 2025 — exactly one year prior, during the tariff shock). Tuesday's 25.77 reads as elevated-but-contained: meaningfully above the complacency zone, well short of systemic stress. The overnight ceasefire announcement should drive a sharp VIX compression Wednesday as the binary risk premium evaporates — but the structural floor has risen from pre-conflict levels, and the 52-week low of 13.38 is unlikely to be retested until a permanent resolution is confirmed.
Equity technicals remain challenged beneath the surface relief. The S&P 500 completed a Death Cross in late March as the 50-day moving average (6,783) crossed below the 200-day moving average (6,644), and the index has been trading below both benchmarks. A +2.8% gap-open at Wednesday's open would bring SPX to approximately 6,801 — precisely back to the 200-day MA zone, which now flips from resistance to a critical confirmation level. A sustained close above 6,644 across multiple sessions is the technical threshold IG Group identifies as needed to validate Wednesday's move as more than a relief bounce. UBS cut its 2026 year-end SPX target from 7,700 to 7,500 on Tuesday, still implying significant upside from current levels, while Goldman Sachs had warned that WTI above $150 on a sustained basis could see SPX retrace toward 5,400 — a scenario that is now substantially less probable with crude below $100.
Credit markets provided relative stability throughout the conflict. High yield OAS stood at approximately 317 basis points entering Wednesday — elevated from early-year levels, but well short of the 450–600 bps range historically associated with recessionary credit stress. Notably, Schwab reported that the average HY OAS fell briefly below 3% earlier in the week before edging back up, suggesting that corporate credit was pricing a conflict resolution before equities fully priced it. Gold closed Tuesday at $4,650 (+1.17%), maintaining its safe-haven bid even as the Pakistan proposal provided intraday equity relief — and surged a further 2.2% overnight to approximately $4,803, an unusual response to a de-escalation that typically pressures safe havens. The persistence of gold strength alongside the ceasefire rally signals that investors are hedging against negotiations breaking down rather than treating the two-week pause as a durable resolution.
Key Takeaway
The VIX/equity divergence on Tuesday — VIX +6.67% while SPX was flat — quantifies precisely how much binary geopolitical risk premium had been priced in. Wednesday's open unwinds that premium, but gold's refusal to sell off on ceasefire news is a sober signal: the market is treating this as a pause, not a peace.
Sector and Cross-Asset Analysis
Oil and gas companies have been the big winners of 2026 — up roughly 34% this year as energy prices surged. That trade is getting unwound fast this morning as crude falls more than 15% overnight. Tech companies had a rough Tuesday: Apple dropped 4% on reports of delays to its new foldable phone, and most of the major chip companies fell. The standout was Broadcom, which jumped 6% after landing major artificial intelligence contracts with Google — a reminder that companies with locked-in AI deals are being rewarded even in a difficult market. The clearest winner from a ceasefire is tech, which suffered the most during the conflict and has the most to gain as growth fears ease.
Key Takeaway
Oil and gas stocks are giving back gains this morning — watch for money rotating back into tech as the war premium unwinds.
Tuesday's sector performance reflected a market navigating uncertainty with no clean conviction. Consumer discretionary, energy, and consumer staples led on the NYSE, with defensive and cyclical names trading together in a pattern more consistent with geopolitical positioning than fundamental rotation. The energy sector — up approximately 34% year-to-date and nearly 8% since the conflict began — has been the dominant market narrative of 2026, but Wednesday's 15% crude collapse will force an immediate reckoning with that trade. WTI at approximately $95 remains 42% above its pre-conflict February 27 level of $67.02, meaning energy equities retain some earnings tailwind even after the overnight correction, but momentum investors who chased the sector into Tuesday's close will face sharp mark-to-market losses at Wednesday's open. Institutional analysts on CNBC's Halftime Report were already flagging energy sector caution before the ceasefire — the overnight move validates that skepticism decisively.
Technology's session on Tuesday continued the intra-sector bifurcation that has defined 2026. Broadcom surged roughly 6% on expanded AI infrastructure agreements with Google and Anthropic, while Arm Holdings declined nearly 6% following a Morgan Stanley downgrade to equal-weight with a $135 price target. Nvidia, AMD, and Qualcomm each fell more than 1%–2%, while Apple dropped 4% on Nikkei reporting that engineering setbacks in its foldable iPhone program could delay mass production by months. The Magnificent Seven as a group are trading near fresh year-to-date lows relative to the broader S&P 500, per JPMorgan strategist Mislav Matejka — a structural underperformance that technology sector bulls argue has now compressed valuations to levels below the global market aggregate on a growth-adjusted basis. The ceasefire-driven relief rally should disproportionately benefit technology and materials, which IG Group identifies as the sectors with the deepest drawdowns relative to their fundamental earnings outlook during the conflict period.
Cross-asset dynamics told a coherent stagflationary story through Tuesday's close that is now pivoting. The dollar weakened to 99.52 on the DXY (-0.47%) despite elevated interest rates at 3.5%–3.75% — a signal that growth concerns were dominating the rate differential. Overnight the dollar has weakened further as the geopolitical safe-haven bid fades. The 2s10s yield curve closed Tuesday at approximately +50 basis points (10Y at 4.301%, 2Y at 3.80%), a meaningfully positive slope that reflects the market's pricing of a higher-for-longer short end against growth uncertainty at the long end. ISM Services data on Tuesday missed consensus but remained in expansionary territory, with the prices paid sub-index elevated — consistent with the energy cost-push dynamic that is now beginning to reverse. International markets have the most to gain from normalization: South Korea's KOSPI surged 5.6% and Japan's Nikkei rose 4.8% overnight, reflecting Asia's disproportionate dependence on Hormuz-transiting energy supply.
Key Takeaway
Energy's 34% YTD lead faces immediate pressure as crude collapses overnight — expect sharp sector rotation toward technology and materials at Wednesday's open. The cross-asset relief rally is broad but uneven: gold's persistence above $4,800 and the dollar's continued weakness signal that institutional positioning remains cautiously hedged against ceasefire breakdown.
Economic Data & Events
Today's Calendar
- 11:00 AM MT — 10-Year Treasury Auction (the U.S. government sells bonds to investors — strong demand keeps long-term borrowing costs, like mortgage rates, lower) — Moderate-High Impact
- 12:00 PM MT — Federal Reserve Meeting Minutes (detailed notes from the Fed's last meeting, showing how policymakers were thinking about interest rates) — High Impact
The Fed minutes are worth watching today, but with an important catch. They cover the March 18th meeting — which happened before the ceasefire — so they'll sound more worried about inflation than the situation now warrants. The real event this week is Friday's inflation report at 6:30 AM MT. It will show March prices, which were pushed up by the oil spike. But with crude falling sharply overnight, that spike may already be fading.
Key Takeaway
Friday's inflation report is the week's most important number — and overnight's oil drop makes it far less threatening than it looked 24 hours ago.
Today's Calendar
- 11:00 AM MT — 10-Year Treasury Note Auction — Moderate-High Impact
Consensus: N/A | Context: Last month's 10-year auction drew concern as demand faltered and yields rose. With 10-year yields falling sharply overnight on ceasefire news, today's auction arrives into a materially different rate environment. A strong bid-to-cover ratio would confirm that foreign and institutional demand for U.S. paper remains intact; a weak result would signal lingering concerns about fiscal sustainability independent of geopolitics.
- 12:00 PM MT — FOMC Meeting Minutes (March 17–18 Meeting) — High Impact
Consensus: N/A | Previous: March meeting held rates at 3.5%–3.75%; dot plot revised to one cut in 2026, seven of 19 participants projected zero cuts; inflation forecast raised from 2.4% to 2.7%. Note: These minutes predate the Iran conflict's escalation to Kharg Island strikes and Tuesday's ceasefire. Markets will read them for committee inflation psychology and any language on energy risk scenarios, but the geopolitical context has already partially resolved.
Week Ahead
Friday's March CPI (6:30 AM MT, April 10) is the week's pivotal release — the Cleveland Fed nowcast of 3.16% YoY was built on conflict-era energy prices; overnight's 15% crude collapse makes it an immediate lagging indicator, but the print will still move markets. Thursday brings Final Q1 GDP, Core PCE, and Weekly Jobless Claims. Q1 earnings season accelerates next week with Goldman Sachs (GS) reporting Monday April 13 — FactSet projects 13.2% S&P 500 EPS growth with 10 of 11 sectors positive. Formal U.S.-Iran peace talks open Friday in Islamabad.
What We're Watching
Monetary Policy
The Fed holds at 3.5%–3.75% with today's FOMC minutes covering the pre-ceasefire March meeting. A durable Hormuz reopening could reopen the rate-cut debate for May 6–7; a breakdown in talks would reinforce the no-cut consensus. Friday's CPI is the next hard data input.
Rates and Fixed Income
The 2s10s curve steepened to approximately +50bps at Tuesday's close, with the 10Y at 4.30% falling further overnight. Today's 10-year auction is a near-term directional test. We favor intermediate duration (3–7 years) as ceasefire-driven yield compression improves the entry point.
Equities
SPX faces the 200-day MA at 6,644 as the first critical confirmation level — a sustained close above validates the relief rally; failure to hold signals a bounce. Rotate attention to technology and materials as energy gives back its war premium. Q1 earnings beginning April 13 are the next fundamental catalyst.
Key Risks
The ceasefire is explicitly two weeks and fragile — Iran retains stated conditions including U.S. withdrawal and sanction relief that Washington has not endorsed. A breakdown in Islamabad talks, missile incidents in Israel or UAE, or Friday's CPI above 3.5% YoY would each independently pressure the rally.
The Bottom Line
Wednesday is shaping up to be the best day for markets since the conflict began — stocks are set to jump at the open on ceasefire relief, and falling oil prices are good news for inflation, interest rates, and your portfolio. The next two weeks will tell us whether this is the beginning of the end or just a pause — stay tuned to Friday's inflation report and news from peace talks in Islamabad.
Wednesday opens with the largest single-session geopolitical risk unwind since the conflict began: S&P 500 futures are up approximately 2.8%, WTI crude has collapsed more than 15% to near $95, and 10-year Treasury yields have fallen sharply overnight — a simultaneous relief trade across equities, bonds, and commodities. The critical technical test is whether SPX can sustain a close above the 200-day moving average near 6,644; a gap-open through that level that fails to hold intraday would signal the rally is a relief bounce rather than a trend change, and would increase the probability of re-testing Tuesday's session lows on any ceasefire complication. FOMC minutes at noon MT inject a second event risk into the session — markets will parse committee language for inflation optionality that the ceasefire has partially restored, and any hint of a dovish pivot scenario would extend gains further into the afternoon. Energy sector positioning will dominate the first hour: the unwind of a 34% YTD trade into a 15% overnight crude decline creates forced selling pressure that could temporarily drag broader indices even as technology and materials lead the relief rally.
Disclosure — AI-Assisted Content & Regulatory Notice
This briefing was drafted with the assistance of artificial intelligence tools. All content has been reviewed and approved by Thomas MacPherson, Investment Adviser Representative (Series 65) and Chief Compliance Officer, River Rose Financial, LLC, prior to publication. AI systems may produce errors, omissions, or outdated information; readers should independently verify data.
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