Finance

Crude oil benchmarks surged on Friday, with Brent crude climbing above $110 per barrel and West Texas Intermediate crossing the $100 mark. The effective closure of the Strait of Hormuz has choked energy supplies, driving up costs and fueling fears of a global inflationary wave. While the energy sector saw gains, the broader market suffered as high fuel costs pressured consumer spending and industrial margins.

The yield on the benchmark 10-year Treasury note spiked to 4.48% this week, reaching its highest level since July 2025. This move reflects a significant shift in expectations as traders scale back hopes for rate cuts and begin pricing in the possibility of a rate hike in 2026 to combat rising energy-driven inflation. Bond markets have seen four consecutive weeks of rising yields as the 'higher for longer' narrative regains dominance among investors.

The tech-heavy Nasdaq underperformed the broader market as mega-cap 'Magnificent Seven' stocks lost over $330 billion in market value in a single session. AI leader Nvidia saw its valuation dip below the S&P 500’s forward price-to-earnings ratio for the first time in years, while Meta and Alphabet faced additional pressure following a landmark social media lawsuit. Investors are increasingly questioning the pace of AI spending returns amidst a broader rotation toward defensive energy and defense assets.

Cryptocurrency markets experienced a sharp sell-off, with Bitcoin falling over 3% to roughly $66,000 and Ethereum dropping toward the $2,000 level. The decline coincided with the year's largest options expiry, totaling approximately $14 billion, which triggered defensive positioning and liquidations of leveraged long positions. Retail-driven selling intensified the volatility as digital assets followed the downward trend of traditional risk-on equity markets.

Upcoming March payroll data is being closely watched after February reported a surprising loss of 92,000 jobs, raising concerns about the health of the U.S. labor market. While unemployment is projected to remain steady at 4.4%, recent revisions showing lower-than-expected job growth in previous months have heightened recessionary fears. The Federal Reserve now faces a policy bind between supporting a weakening labor market and addressing resurgent inflation caused by high energy prices.