Stocks & Bonds Shrug Off Oil Angst About Peace Talks; Bitcoin & Bullion Bid

Tl;dr: Last night's US proposal for a ceasefire (and subsequent rejection by Iran) were the drivers of the day's price action with the massive kneejerk lower in oil (higher in stocks) giving way to a slow bleed higher in oil. But... stocks and bonds did not track with oil's reversal. The dollar ended flat while bitcoin and gold managed strong gains.

Light macro today but what did print was a shocker with import/export prices dramatically higher than expected (RAM prices not helping). Overall, the US macro backdrop (especially hard data) is not supportive for stocks (absent the oil crisis)...

The peace proposal (or whatever you want to call it) did not have a significant impact on the odds of a ceasefire by the end of April...

Source: Polymarket

Something different today as the 'correlation-one' - oil is all-knowing - regime appeared to weaken with oil reversing its losses in the afternoon... and stocks and bonds shrugging it off to some extent...

With that 'decoupling' in mind, Bloomberg reports that the current spell of negative correlation between the S&P 500 and WTI - 17 days beginning March 3 - has also hit a level of significance that has only been surpassed twice since the start of 2022. 

So what drove oil's moves today?

Oil

Most of the major excitement occurred last night after the close, but this afternoon saw things begin to get interesting again as the 'half-life' of positive sentiment moves in the oil markets appears to be getting shorter...

• Overnight: Oil lower as Iran confirmed reception of US' 15-point peace plan seeking a one-month ceasefire (and rejected it); Iran continued attacks on Arab Gulf states and Israel overnight and tightened control of Hormuz

• 0815ET Iran Does Not Accept Ceasefire, Says US Talks Illogical: Fars - Oil prices surged, stocks drop

• 0835ET Oil hits overnight highs and fades quickly (no HL catalyst)

• 0945ET IRAN'S RESPONSE TO THE AMERICAN PLAN: IRAN WILL END WAR AT TIME OF OWN CHOOSING, WON'T ALLOW TRUMP TO DICTATE TIMING: PRESS TV - oil price rises

• 1100ET IRAN’S BUSHEHR NUCLEAR POWER PLANT STRUCK AGAIN: PRESS TV - oil to high of day (WTI $90)

• 1330ET TRUMP TO TRAVEL TO CHINA MAY 14, 15 , LEAVITT SAYS - oil stabilized (presumption that war over by then)

• 1445ET IRAN FM ABBAS ARAQCHI CALLS WAR A 'GOLDEN MOMENT', SAYS THERE ARE 'NO TALKS WITH THE US WHICH HAS FAILED IN WAR GOALS' - oil pushed to the highs of the day

Given that it's increasingly difficult to trust the words coming out of anyone's mouths, we leave it to the market - in its almost infinite wisdom as a weighing machine - to judge it... and if that's the case - it sure ain't buying the idea of an imminent ceasefire (so we suggest power plant operators in Iran, grab your hard hats).

Oil prices (both WTI and Brent) plunged 6-7% from yesterday's highs to overnight lows before rebounding from that kneejerk lows, erasing almost the entire drop by the close...

Oman/Dubai oil prices plunged this week as the market figured out that oil transits to Asia (China, India, Japan) are starting to flow...

CHART OF THE DAY: The idea was that Brent/WTI was going to catch up higher towards where Oman/Dubai crude was trading (>$150 a barrel)

Instead, we are witnessing Oman/Dubai crude plunging >$45 a barrel in a single day to ~$110 a barrel. Murban crude is also sharply lower today. pic.twitter.com/2MWTY1RbqJ

— Javier Blas (@JavierBlas) March 25, 2026

Shifting down the pipeline, refined products (gasoline and diesel in this case) continue to charge higher with the latter now above $5 a gallon for nine straight days...

Is this what triggered the Trump put?

Stocks

All the US majors closed green on the day, despite the late-day weakness (and barely any move in crude by the close).

As the chart shows, the entire gains on the day were in the few minutes last night as 'ceasefire' headlines hit - we have gone nowhere since. Small Caps were the modest outperformer...

But, all the majors are also red from the cash open today...

0-DTE traders were selling straddles/strangles during the heart of the day (hoping for some vol compression) but then had to capitulate as stocks rolled over on a resurgence in crude...

Source: SpotGamma

All the majors failed at their attempts to break back above key technical resistance...

The opening short-squeeze saw no follow-through...

Geo-political headlines remain fast and furious and exhausting with the US and Iran trading point by point plans, however, as we noted above, investors are become numb to the constant back and forth which is reflected in activity levels.

Goldman's trading desk noted that market volumes remain subdued (down 3% vs. the trailing two weeks) while ETFs activity remains elevated (currently 37% of tape – exactly in line with this month’s daily avg) with their floor tilting +2% better to buy as both HFs and LOs are on the bid

• HF are +6% better to buy, this ranks in the 80th %-ile over the last 1yr.  Demand for Tech, Fins, Cons Disc and Macro Prods offsets supply in HCare, Utes & Comm Svcs

• LOs are +5% better to buy with Tech and ETF supply offset by demand across Industrials, Consumers and HCare

Goldman's traders also noted that the market remains volatile as the S&P has now traded in at least a 1% band for the 6th straight day, just the 4th time in the last yr we’ve seen a streak this long (it was 1yr ago that started a run of 27 straight sessions of at least a 1% S&P intraday move, which also included the entire month of April)

As ETFs continue to dominate tape volumes with this month set to finish as the highest daily average for ETFs as % of tape volumes in Goldman's dataset...

And with that in mind, since the war began, single-stock volatility is actually lower... while index vol is (obviously) significantly higher...

Goldman traders saw significant Insurance Broker weakness today with the group down on elevated volumes... many pointing towards more AI @ Risk concerns with a job posting from Anthropic for an Insurance Industry Advisor to be the "technical and strategic face of Claude".

And before we leave equity-land, we note that despite being "teased" with desire to take shots and play these prior moves for reversal / fade the Vol squeeze and Beta selloffs, Nomura's Charlie McElligott notes that people are largely paralyzed from trading right now...

1) there’s existential career risk with the current macro Vol clustering, and it’s just really difficult to get approval to be Short Puts / Short Crash right now per recent events, and

2) there remains a rather “pervasive skepticism” toward a “quick fix” with the conflict, again, because of the structural damage being done to global economy with this Commodities supply shock and the ugliness of potential CB HIKES into the fragile growth backdrop…and all while this isn’t just about Iran / Commods / Rate Vol negative feedback loop either,

...bc we still have 3) clear signs of deterioration in US Employment trend,

4) the AI rolling industry disruption which further feeds into both Labor and 

5) the Private Credit gating / redemption / liquidity -debacle all conspiring simultaneously.

We suspect a retest of the 'Trump Put' is imminent.

Rates

US Treasury yields were lower today (decoupling from the moves in oil - as we noted at the start) with the the long-end outperforming (30Y -4bps, 2Y -2bps) despite another ugly auction (5Y)...

Rate-change expectations were flat in the US (still pricing in a higher likelihood of a hike than a cut this year) but declined (dovishly) in UK and EU...

Inflation Breakevens declined today...

The yield curve flattened modestly (back to Monday's lows).

Everything Else

The dollar opened weaker, but was bid non-stop ending at yesterday's highs...

Gold extended its bounce off the 200DMA (Fib 38.2% retrace) today...

...with spot prices testing $4600 at the day's highs before the late-day weakness ...

Bitcoin tested $72,000 before fading back below $71k and actually underperformed gold for the first time since the war began...

Finally, as Goldman's Shreeti Kapa notes, since the start of the Middle East war, MSCI World is down around 7%...

This is still a small drawdown in a long-run context - the deepest drawdowns happened when the growth/inflation mix was very unfavorable due to high and sticky inflation during the 1970s and 2022, or when they coincided with deep equity bear markets such as the Tech Bubble and the GFC.

Markets have mostly priced a rate-shock but limited growth risks...

This is much in contrast to the energy shock in 2022, which also led to a much larger negative rate shock as real yields sharply increased from negative levels

...And equities are more expensive than they were going into the 2022 shock...

This is true across a range of valuation multiples and valuations today compare unfavorably not just versus lows but also versus valuations just before the last energy shock in 2022.

All of which, she concludes, means 'cash is king' again: Binary risk environments reward optionality and liquidity over conviction. Investors that do well in such instances aren't ones that call the bottom correctly, they are the ones who had cash to deploy when uncertainty cleared. Given near zero equity risk premium and all time high valuations across regions & sectors today, cash is actually a reasonable asymmetric position – you give up almost nothing in expected return and gain significant flexibility!