Stocks, Bonds, Bullion, & Bitcoin Battered As Iran 'Hammered', PPI 'Hot', & Fed 'Hawkish'

Tl;dr: Everything was awesome for a few glorious hours overnight as you slept (oil down, stocks up), and then US/Israel struck upstream Iranian energy assets for the first time sent everything into reverse (as meme stock mania continues in oil). The move (not helped by a very hot PPI and a mildly hawkish Fed) also slammed bond yields and the dollar higher. Bitcoin and gold puked bigly... as St.Paddy's day hangover - everything green turns red...

Overall, the new normal correlation regime in capital markets remains in place today - but we do note that oil's rise from overnight lows (red box) was initially ignored by bonds and stocks... and then they got a reality check... and then post-Fed, stocks and bonds became even higher beta to oil (orange box)...

Fed

For once, the oil markets almost had a 'contender' for moving markets with inflation evidence starting to show in PPI and inflation fears priced in to The Fed's SEP.

David Russell at Tradestation summed The Fed up well (rather than belabor the point): 

"The dovish camp is fading as stagflation takes hold. The Fed isn’t panicking about the Iran war yet, but the higher inflation estimate shows they’re ready to get more hawkish if needed. Policymakers are watching both sides of the mandate, but price stability is getting more important."

And Bob Michele from JP Morgan was 'surprised' to say the least: 

“gobsmacked by the Fed’s decision because it implies that despite everything going on in the Middle East, the economy will still accelerate while employment will stay stable. I just don’t see that. I think there is a real impact to inflation and ultimately to the economy and the labor market."

Oil

But, despite that, it was oil that really drove the bus... again. Here's what prompted some of those intraday moves today...

• Overnight: Oil prices slid as Iranian Intel chief killed and Trump reiterated "we'll be leaving in the near future" (bringing hopes of an end closer?) Additionally, Saudi's biggest oil refinery restarted operations

• Morning: US attacked upstream Iranian oil and gas assets directly for first time sending oil prices soaring higher

• 0845ET Iran threatened direct retaliation "targeting enemy infrastructure previously thought to be safe." - oil prices accelerated higher

• 0945ET *TRUMP WAIVES JONES ACT IN BID TO CURB HIGH FUEL PRICES - no impact on oil (prices kept rising)

• 1000ET Saudi begins evacuating some facilities - oil prices higher

• 1030ET Big crude inventory build and data showing surge in US exports (to manage global supply) - prices dipped 

• 1105ET Iran Says South Pars Gas Field Situation Under Control: Tasnim - prices started top roll over around $98 (WTI)

• 1145ET JPM Report that Saudi Arabia has resumed half of its oil exports via the East-West pipeline amid disruptions - prices turned down

• 1205ET *VANCE TO MEET WITH OIL EXECUTIVES AS FUEL PRICES SURGE - prices extended lower

• 1240ET Demand destruction arrives? Global passenger jet fuel demand is set to decrease by 0.8% for the week - prices dip

• 1335ET *IRAN'S ARAGHCHI SPOKE WITH EU'S FOREIGN AFFAIRS CHIEF KALLAS - prices extend lower

• 1400ET FOMC - Oil tumbled to $95 (WTI), down on the day, ahead of Powell

• 1415ET Hawkish Hold from FOMC pushed oil pries higher (back green on the day)

• 1440ET *QATARENERGY: RAS LAFFAN INDUSTRIAL CITY ATTACKED BY MISSILES  - prices extended rebound back above $96 (WTI)

• 1520Et *UAE: AIR DEFENSE SYSTEMS CURRENTLY RESPONDING TO MISSILE THREAT, IAF strikes Iranian navy ships in Caspian Sea - prices pushed back above $97 (WTI)

Given all that, some context is required of the bigger picture:

There has been a small uptick in crude tankers transiting Hormuz over the past week, however not a material percentage of pre-conflict levels and refined products remain the most impacted, according to Goldman Sachs.

Some of the transits opted for a narrow channel between the islands of Qeshm and Larak, close to the Iranian coast, potentially pointing to a partial, selective, resumption of transits from an Iranian perspective...

Estimates are that average daily flows through the Strait of Hormuz are still 98% below their normal levels...

A busy day in the energy complex and by the close, WTI closed higher (around $97) - dramatically off the overnight $91 handle lows...

Nattie also soared on the day...

Stocks

As we noted above, equities broadly followed oil's rises and falls (inversely) but we do note that stocks did not benefit from the significant decline in oil into The Fed. The Dow and Small Caps were the day's biggest losers with Nasdaq and S&P modestly outperforming (benefiting from strength in memory stocks)...

The Dow closed below its 200DMA for the first time since June 2025...

One thing of particular note today was the 0-DTE traders got it wrong bigly... desperately trying to lift the declining index into The Fed statement... then folding like a cheap suit after...

Energy was the only sector in the green today (as Industrials holding in well until the post-fed plunge). Consumer stocks were both punished as rates rose (and The Fed confirmed the punch bowl was not gonna be there)...

Memory stocks have become the place to hide (for now)...

Activity levels remain quiet, according to Goldman Sachs traders, and are at a 3 out of 10. Overall desk is -2% better for sale. 

• LOs are +2% better to buy on small notional. Buying tech, consumer disc, and indus vs selling fins and health care. 

• HFs are better for sale lead by supply in tech, consumer discretionary, and energy vs light demand in fins and indus. 

And liquidity remains abysmal with Top of Book currently sitting at $2.06m, a 62% drawdown from our 20DMA.

ETFs relative activity remain extremely elevated amidst geopolitical headlines, with ETF volumes 39%.

After three straight days of big opening squeezes higher, today was the opposite...

Today's moves in stocks were not helped by the significant negative gamma in the market...

...and FWIW, Nomura's Charlie McElligott warns that below 6600 there could be some “speed” lower without a lot of Long Gamma stickiness south of it, and with big Short Gamma @ / through the 6475 strike.

Rates

Treasuries were dumped as oil prices rose overnight, a hot PPI made it worse, and then a slightly hawkish Fed pushed yields even higher with the short-end out under-performing...

Rate-cut expectations for 2026 plunged (hawkishly) today (dropping with oil's gains early and then extending after The Fed). 2026 rate-cut expectations are down from over 62bps to just 15bps today since the start of the war...

The yield curve (2s30s) tumbled to close at its flattest since

As the 2Y yield is now higher on the week...

Everything Else

The dollar pushed significantly higher on the day - legging first on safe-haven demand from MidEast tensions and then on hawkish Fed...

Gold puked into correction territory (down 10% from the highs), plunging from $5000 to hover around $4850 at one-month lows...

Bitcoin also plunged (for a change), tumbling from above $74k to below $71k...

Finally, if you had any doubts that the machines were in charge (tongue in cheek). Goldman Sachs Prime Book data shows that Global Fundamental L/S performance has fallen alongside the market benchmark so far in March and erased nearly all YTD gains (-3.89% MTD, now +0.12% YTD) - left chart below...

...while Systematic L/S funds (right chart above) are outperforming the market benchmark, down -0.57% MTD and now up +4.85% YTD globally.