Borrowed peace pays hefty interest – North American Session Market Wrap for March 27

Log in to today's North American session Market wrap for March 27

Today's session marked the interest payment from Markets to borrowed tranquility throughout the beginning of this week. And the price is hefty.

After the first few trading days of the week, it could have been easy to say that blue skies are ahead and current prices are gifts that any investor would take, amid historically elevated Markets.

But there is no free lunch in this economy, and Participants made global assets pay for this fragile rebound. President Trump welcomed Investors with a soft message at the beginning of the week, then delivered a sharp shift in tone regarding Iran in his first weekly Truth Social Post.

A 3% prompt rally across all Stock Markets and overall Markets followed, accompanied by a drop in WTI to $88, but the effect was merely temporary; the slow, then accelerating, grind higher that followed in Black Gold reshaped this positive trajectory for the worse.

Gradually, people realized that the optimism from the White House would not have been realistic enough to bring about a real end to the ongoing conflict. As the week ended with further fears of a prolonged conflict, Stocks got hit with a nasty hangover.

After all, without a concrete resolution to the still-blockaded Strait of Hormuz and a real, long-term guarantee that the conflict won't escalate further, Markets cannot rally.

Traders need trust to return to persistent buying of already elevated valuations.

Particularly given that Wall Street fiercely held the initial rise in WTI and the US Dollar, it could only be the beginning of much more pain ahead.

Of course, a return to positive sentiment will only be contingent on the conflict not extending much longer, as more disruptions in Oil prices can now be expected to precede a large drag on global economies.

It could be too early to say that inflation effects will actually lead to Central Bank hikes, something that Markets fear like the Boogieman – but even if they don't, the strain on economies from higher petrol prices amid a still-growing but stagnating economy could be too much to hold for Equity bulls.

At least, Metals are rebounding, with Markets now assuming this pain could get deeper and harsher, triggering the need for some safe havens.

We will know more over the weekend. The way to know more is to watch how Bitcoin moves, as other Markets will be closed. If you see green, a deal could really be drawing.

If you see large red prints, assume that the war could last at least a few more weeks beyond the announced deadline.

Check out our recent Bitcoin analysis to learn more on such catalysts and levels of interest.

Read More:

• Markets Weekly Outlook - Middle East uncertainty to dominate ahead of jobs report, Nasdaq 100 at 6-month lows
• Stocks reach new lows as War goes on – Dow Jones and US Stock Market Outlook
• Gold (XAU/USD) bounces despite the Oil rally, a first since the US-Iran War – In-depth outlook

Most of the moves in Stock Markets aggravated as the session went on and the bloodshed continued.

Utilities and Industrials were outperformers but they ceded to the general pressure with only Energy Stocks bouncing.

Tech, Finance and Mag 7s dragged Equities in today's interest paying selloff.

The asset map shows a classic inflation repricing picture, with Cryptos and Stocks, particularly the highest Beta-assets, hurting the most in another harsh selloff.

Bonds once again took a turn to the downside, unable to withhold the pressure of WTI retaking $100 – Metals are once again shining as the true safe-havens in the latest Market turn.

Of course, WTI and its US Dollar peer are the two leaders of the pack – Monday will be very interesting as this could just be the beginning of a much tougher move.

As per usual on strong Oil session, the US Dollar ends up on top with the Canadian Dollar doing its best to catch up.

On the other hand, all other currencies suffered on the day – Taking a step back, the extent of FX movement was still relatively contained.

Next week will be a much heavier one for Macro, with Inflation reports coming for the Eurozone and Japan to start the week.

Those who enjoy Fedspeak will have to log in to two of the most important speakers at the Fed: Mr Powell at 10:30 (ET) and Fed's Williams at 16:30 (ET) – Expect both speeches to be large movers for the US Dollar and rate expectations!

Keep a close eye on sentiment and Middle East news.

Safe Trades!

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