Tehran’s Rejection of Washington’s Peace Offer Lifts Crude, Yields: March 26, 2026

Tehran’s rejection of Washington’s peace offer is generating a fresh bout of turbulence on Wall Street, as investors fear that the conflict could escalate further. The worries are indeed justified by President Trump threatening to heighten military action, which may even include troops arriving on the ground if Iranian officials don’t agree to a deal soon. The lack of agreement is injecting more geopolitical premium into asset classes by lifting crude oil prices and interest rates, which is therefore weighing on the global growth outlook and on stocks as a result. Inflation expectations are being raised as WTI approaches $95 and the yield curve is ascending in bear-flattening fashion led by the short-end, as fixed-income observers consider an increasingly tight Federal Reserve. Treasuries are also getting battered by lackluster showings at recent auctions while additionally, this morning’s lighter-than-anticipated continuing claims, which dropped to a 22-month low, weakened the argument for the labor market needing imminent cuts. The combination of events has the greenback advancing while equities descend across all major benchmarks and throughout most sectors and subcategories, although energy, real estate and biotech are exceptions. A similar story is taking place in commodities that are broadly sinking except those related to energy. Elsewhere, an absence of speculative enthusiasm is hampering cryptocurrencies and driving traders to reach for volatility protection instruments, which are seeing heavier premiums in light of risk-off winds today.

Unemployment Claims Shore Up Labor Market Optimism

Labor market optimism was supported this morning by a 22-month low in continuing unemployment claims, as the 1.819 million print was the lowest since May 2024. Additionally, it came in beneath the 1.850 million median estimate for the week ended March 14 and the prior time span’s 1.851 million. Initial filings for the following seven-day period culminating on March 21, meanwhile, were also encouraging, arriving at 210k, exactly as expected and slightly loftier than the 205k from the previous interval. Four-week moving averages declined modestly from 1.849 million and 210.75k to 1.847 million and 210.5k.

Markets Need Real Progress Soon

President Trump’s messaging regarding the Iran conflict has helped to quell volatility on Wall Street by limiting the damage in stocks, rates and energy; however, investors will need to see real progress soon or else market performance will suffer further. Equities and Treasuries are poised to endure much deeper losses if an ongoing war sends WTI crude back above $100 for several weeks. Against this backdrop, recession risk is rising by the day as is typical when the landscape is infected by an oil price shock because overall activity and top lines are hampered by lessening spending and investment capacity as a result of more dollars being allocated to heavier costs for fuel and power. The White House has been successful in downplaying the potential headwinds so far, but time is running out for the administration to shield the American public and corporates alike from worsening economic prospects directly attributed to Middle East hostilities.

International Roundup

Services Inflation Picks Up in Japan

Prices of services that businesses charge other companies climbed 2.7% year over year (y/y) in Japan last month, according to the Bank of Japan’s Corporate Services Price Index (CSPI). The print exceeded the economist consensus estimate for a 2.6% climb, which would have matched January’s result. Relative to January, prices were up 0.2%.

Among broad categories, the month over month (m/m) inflation was supported by the transportation services, information and communications, leasing and rental and other services groups with costs growing 0.4%, 0.1%, 0.2%, and 0.5%. The advertising services group, the finance and insurance category and the real estate service classification fell 0.9%, 0.2% and 0.8%. Japan has been struggling with a labor shortage and the hotter than expected CSPI is stoking fears that companies are starting to pass higher payroll costs onto customers. 

Singapore Industrial Production Falls

Industrial production in Singapore dropped 0.1% y/y and 7.2% m/m, an abrupt reversal from January’s 12.9% and 2% ascents. It was the first y/y contraction since August 2025. However, when excluding the biomedical sector, output was up 3.9% y/y but the m/m decline fell further to 9.4%. 

The country’s strength in semiconductor manufacturing and other high-tech products resulted in electronics output heading north by 13.7% y/y. The result only partially offset weakness in other categories as follows:

• Biomedical, down 27.3% driven by weak demand for devices
• General manufacturing, down 5.7% with weakness among food, beverages and tobacco
• Chemicals, down 4.6%. Petrochemicals and specialty segments were affected by weak demand and plant shutdowns
• Precision engineering, down 0.2% 

 Hong Kong Trade Deficit Expands

Hong Kong global trade continued to grow during the first two months of the year but its imports persisted in exceeding exports. The special administrative region (SAR) provided data from January and February due to the Chinese Lunar New Year occurring in different months in 2025 and 2026. For the period, exports climbed by 29.6% year over year (y/y) and imports were up 34.1%. The SAR’s trade deficit was $79 billion compared to the $34.2 billion shortfall for the two-month period in 2025.

For February, exports were up 24.7% y/y and imports grew 29.9%, resulting in a $64.2 billion trade deficit. The value of shipments to other Asian jurisdictions jumped 23.4% y/y, led by 121.9% and 69.8% jumps for Malaysia and Singapore. Outside of Asia, shipments to Switzerland, the Netherlands and the USA leaped 78.9%, 68.3% and 38.8%. This month saw foreign demand for electrical machinery, apparatus and appliances, and electrical parts climb 30.8%. Purchases by non-SAR customers for telecommunications and sound recording and reproducing apparatus and equipment items and the separate non-ferrous metals also strengthened by 41.5% and 289.4%.

Higher levels of imports were most notable with the UK, India, Korea and Vietnam. Values of transactions from those countries expanded by 230.6%,130.8%, 113.6% and 71.6%. The gains were led by a 39.5% jump in the electrical machinery, apparatus and appliances, and electrical parts category and a 474.8% hike in the non-ferrous metals group.