Fractured Jawbone: Crude Jumps, Stocks Dump, & Bond Fears Shift To Economic Slump

Tl;dr: With the fourth week of the war in Iran almost in the bag, it's more of the same with oil up (erasing the early week jawboning drop), stocks down (Nasdaq now in correction) and yields up (though fading today as we suspect growth fears are trumping inflation scares). Gold and the dollar rallied on the week while bitcoin was dumped along with big-tech.

On the day, bonds decoupled dramatically from the higher oil/lower stocks regime as we suspect investors shift from short-term inflation fears to longer-term growth/recession fears of an extended disruption...

But what really matters for now is oil.. and the death of jawboning that we saw this week...

Oil

Here's what drove oil price action today...

• Overnight: Trump delays power-plant attacks by 10 days (oil plunges then reverts rapidly); Escalation on all fronts: IRGC HQ targeted by US-Israel; Iran signals expansion by naming UAE targets, hitting Kuwait ports and sending drones on Riyadh - WTI higher at $97

• Morning: Iran said it turned back three container vessels of different nationalities attempting to transit the strait - oil extends to $98 (erasing all of 5-day delay plunge)

• 1250ET *TRUMP: WE'RE DOING REALLY WELL IN IRAN - oil at HoD

• 1300Et *RUBIO TELLS ALLIES IRAN WAR WILL CONTINUE 2-4 MORE WEEKS: AXIOS - oil higher

• 1310ET *US SIGNALS TO ALLIES NO IMMEDIATE PLANS FOR IRAN INVASION - small dip in oil prices

• 1330ET ISRAELI MEDIA SECURITY SOURCE: OPERATIONS IN IRAN MAY CONTINUE FOR ANOTHER 4 WEEKS - oil new HoD

• 1400ET Aragchi: Iran will exact HEAVY price for Israeli crimes - WTI tested $100

• 1555ET TURKISH FOREIGN MINISTER SAYS NEGOTIATIONS BETWEEN US AND TEHRAN HAVE STARTED - small dip in crude

• 1605ET *WITKOFF: TRUMP WANTS A PEACE DEAL, THINK THERE WILL BE IRAN MEETINGS THIS WEEK - 'too late' Trump jawbone

A quieter day on the deadline front but not for prices which pushed higher all day, erasing all of the 5-day-ceasefire plunge from early in the week and WTI testing back above $100.

Despite three efforts to jawbone prices lower (5-day delay, 'ceasefire' proposal, and 10-day delay), WTI ended the week higher/flat...

This week did see Oman/Dubai prices drop (catching down towards Brent) as Asian flows improved, but overall, since the war began, crude oil prices are up 60-100% (depending on source)...

And higher oil prices mean only one thing... higher gas and diesel prices (with the former on the verge of $4 a gallon national average and the latter driving demand-destruction)...

Before we leave oil-land, as we detailed a few times today (here, here, and here), the real impact from the conflict is evolving from a flow disruption to a stock depletion story.

Bloomberg's Michael Ball confirms that oil-in-transit has collapsed, leaving inventories as the buffer, and that buffer is being drawn down unevenly.

• Asia is already seeing physical shortages and demand destruction.

• Europe faces a price shock next.

• The US follows later through product dislocations rather than outright scarcity.

At the same time, liquidity is also deteriorating in the oil futures market. Put together, the market is no longer trading a quick resolution. It is trading escalation, tightening supply, and thinner liquidity — a mix that points to higher oil.

As Goldman's Rich Privorotsky poignantly noted: "you can't jawbone molecules."

And higher oil prices means lower stock prices...

Stocks

Nasdaq was the week's biggest loser, down over 3%, followed by the S&P. Interestingly, Small Caps managed to cling to gains (mostly garnered by a massive short-squeeze on Monday and Tuesday)...

That is the S&P 500's 5th weekly decline in a row - the longest streak since May 2022.

Since the war began, all the majors are down 7-8%...

Nasdaq is officially in a correction, down 10% from its highs...

Unsurprisingly, the Energy sector outperformed this week (along with Materials) while Tech and Financials were clubbed like a baby seal...

The Short-Squeezes are becoming increasingly futile...

Despite a strong open on Monday, Mag7 stocks dramatically underperformed S&P 493 this week...

Microsoft is suffering its worst start to a year... ever...

Before we leave equity-land, we note that the S&P broke below the perceived support zone between 6,500 and the JPMorgan collar strike slightly below that at 6,475 (which expires on 3/31).

As Bloomberg's Michael Ball notes, the 6,475 JPM put strike isn’t true support. The size and visibility of the firm’s position -- as seen on the lefthand bar of the chart below -- could draw in support, as seen Friday, but mechanically that’s not guaranteed. The negative gamma profile for market makers who are short the puts makes it not stabilizing according to Ananth Muniyappa on Oppenheimer’s Equity Derivative Desk. As we approach that level dealers who are short those options increasingly have to sell E-mini S&P 500 futures to delta hedge, pushing the index lower through the strike.

As SpotGamma notes, you can see above in TRACE, its still negative gamma across nearly the entire SPX range, with the exception of a pocket of short 0DTE puts near 6,330.

That area near 6,300 is quite frankly the only excuse of support we could make - but its a fairly weak zone given its smaller 0DTE positions (several strikes in the ~7.5k contract range).

We cannot imagine why anyone would want to hold short vol risk into the weekend, and so that likely keeps a downside bid into this market.

This makes the current area unstable, with rising implied volatility reinforcing that.

In a negative gamma regime, higher vol drives more reactive hedging and sharper swings.

With oil back on the rise and the vol surface shifting higher across expiries, traders are bracing for a broader risk-off regime.

We do not state this lightly, but there is a real lack of faith in resolution to a "known unknown" (Iran), and the VIX is about to go >30, which is a signal that convexity is about to enter the market.

Back to the theme from above - that jawboning is dead, SpotGamma concludes, this past Monday AM wrote about the chain risk-reaction that seemed to have been set in motion, detailing the higher oil->higher rates->higher equity vol (read here), and a pre-market Trump tweet about pausing operations ripped futures +3%.

The somewhat scary thing here is that the market is seemingly no longer believing these tweets, as the half life of equity-bounces related to them is dropping.

When the VIX crosses 30 we see that SPX RV is typically >25% - 30%, which is the type of vol we saw yesterday. 

What's our point?

1) SPX RV has been light, and 2) we think the risk here is that SPX starts to "earn its implied vol", which is where the crash part comes in.

Why?

Because 1) oil seems poised to go >100 and 2) We do think the JPM strike was offering a bit of stability, and once that's gone we see no obvious support.

As Goldman's trading desk warns, with the SPX through all its major moving averages and down ~8% YTD, 6300 (-10% correction zone) is the next level to watch.

Intra-year -10% corrects are painful but common!

Rates

Yields are up across the curve this week with the long-end outperforming (and the curve steepening)...

...a notable bid to bonds today (decoupling from the correlation-one with oil and stocks) suggests inflation fears are ebbing and attention is shifting to growth concerns.

5Y5Y inflation swaps signal the ongoing decline in medium-term inflation...

The yield curve bear flattened all week, but steepened today off 8-month lows...

The market's expectations for central bank actions in 2026 rose (hawkishly) this week (with a modest pullback today as stocks extended their losses)...

The question is - when does the 'growth scare' in bonds then flop over into a 'growth scare' for still high-priced stocks?

Meanwhile, before we leave rates-land, the plumbing of the financial markets is really starting to show cracks as cross-currency basis swaps signal an increasing dollar shortage...

...dominated by the Swiss and Japanese.

Everything Else

The dollar surged to its highest since November 2025 (up for the 3rd week in the last 4), ripping back from the 5-day-delay slump on Monday...

After three down weeks, Gold actually managed to close green on the week (thanks to a push back above $4500 today), bouncing back significantly from the Monday '5-day pause' plunge...

Silver (and Copper) outperformed gold this week while Platinum was lower...

Bitcoin fell for the second week in a row, down below $66k - but basically unchanged since the war began...

Finally, Bloomberg Intelligence strategist Nathaniel Welnhofer notes that tech’s pullback leaves the Nasdaq’s forward price to earnings valuation premium over the S&P 500 at just 4.4%, the smallest since January 2019. As recently as October, the premium stood at 35.7%...

Will April's seasonals save the day?

...or is this time different?

We give Goldman's Tony Pasquariello the last word this week: the longer things drag out [in Iran], the more vulnerable the market becomes to a genuine growth scare (as a colleague put it, "the market is increasingly short time").

Tick-Tock!